David Eccleston Today Tonight May 12, 2010
Are you sick of hearing about greedy banks and their billion dollar profits? We'll it's time to shake the money tree and get your cash back.
Westpac recently boasted a $1.8 billion profit, ANZ $1.9 billion and the NAB more than $2 billion. Today, the Commonwealth Bank boasted a $1.5 billion profit just as the biggest class action corporate Australia has ever faced was announced.
That's right, the big four will face court for overcharging millions of customers $5 billion in late fees and penalties.
Today Tonight's called on the best in the business - money wiz Peter Switzer, financial author Nicole Pederson McKinnon and broker specialist Paul Brady from [http://www.yourshare.com.au. YourShare.com.au] - to show you how to beat the banks.
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"It's fair to say the Australian population has got really jack of fees, we're fully aware of how much we're paying and we're not happy about it," Nicole Pederson McKinnon said.
"If you're not getting those fees and commissions back - you're throwing your money away," Paul Brady said.
A dirty little secret the banks, financial advisors and brokers don't want uncovered is the fees and trailing commissions paid to a company or reps for selling a product to a customer.
"I would say the vast majority of people - over 90 percent - wouldn't realise there was a commission charged and there was money there available they could get back," Bruce Stevens said.
The fees may be tiny - point .06 percent hidden in repayments - that you pay year after year. If you don't claim the fees, the banks and insurance companies or their reps will.
"All the banks pay different levels of fees and commissions but as an average it does point two percent of the loan amount, so if you've got a loan for $100,000 you're paying $200 a year in charges," explains Paul Brady.
Now their little cash cow is out of the bag - smart customers are cashing in by going through a specialised broker or financial advisor to get cash back.
"They disclose that in the literature but they don’t advertise the fact they're charging you a commission," Paul Brady said.
Bruce Stevens got $810 cash back from commissions for his mortgage and car insurance.
Pensioner Delores Crystal has $256 put back into her pockets from her retirement fund.
Mother Jacqui Cameron will use her $552 cheque from life insurance to put towards her childcare bill.
"It would be absolutely ridiculous given the information we have now to not investigate if you are in a position to get this kind of rebate back," Peter Switzer said.
"You need to switch your transaction account to get great deals but its worth it because you'll save hundreds of dollars a year," Nicole said.
Mum of twin boys Samantha May has four accounts she manages online. She saves hundreds of dollars a year.
"I never walk into a bank - I do all my banking online. None of my accounts pay fees. I don't pay withdrawal fees, transfer fees, it's all free."
Over the last decade, the banks have pushed us from check-out banking - to phone banking - to EFTPOS - to internet banking. There are thousands of options.
Choice magazine looked at them all and voted ING Direct Orange everyday account runner up in best low fee account.
It has no:
- monthly or penalty fees
- no ATM fees - $200 minimum
- 50c payment to you with $200 EFTPOS withdrawal
The Classic Banking Account with NAB was their top pick - it has no withdrawal minimum and no ATM or account keeping fees.
"The fact is if you have had an account for over a year you're paying over the odds, you could be getting that for free the banks are really on notice," Nicole said.