Published on October 24, 2016 12:32 pm, by Jen Bakker
The banks are telling us that they are struggling, with margins being squeezed in all areas, and particularly in the mortgage market. Yet they still reportedly managed to increase their profits!
National Australia Bank is due to release expected profit results of around $6.4 billion later this week, with ANZ and Westpac to follow in the coming weeks. Commonwealth Bank have already released a profit of $9.5 million in August and it is widely expected that the top 4 banks will contribute to a collective profit of $30 billion.
This means that the average Aussie contributes $1,700 per year to the big banks’ profits. Obviously some people contribute a whole lot less, while others contribute a whole lot more.
Bearing that in mind, here are some things you can do to keep your own contribution to that figure as low as you can.
Home Loan Interest rates: In recent times we have continued to see the Reserve Bank of Australia drop the official interest rate, yet the banks often do not match this. This results in the profit margin on your loan increasing for the bank. Being proactive and asking your bank to reduce your rate will often yield results and if not, there are plenty of other providers who will value your business.
Check your MoneyBrilliant profile and see how much you paid in home loan interest the last twelve months.
Credit card fees, charges & interest rates: The banks have kept credit card annual fees, charges and interest rates steady even as the official cash rate has dropped to a historic low. Credit card interest is phenomenally high, late fees are widely varied, and other fees and charges contribute to the profit made. Not all credit cards are created equal, and a little bit of inconvenience can save you some big costs over the span of a year.
Check your MoneyBrilliant profile and see how much you paid in credit card fees, charges and interest in the last twelve months.
Other debt products: Other debt products such as overdrafts and personal loans also make the banks a decent profit. It’s in your best interests to consolidate any debt facilities into an account with the lowest interest you can find, and pay it off fast. Rather than having money in savings earning non-existent interest, use it repay debt and contribute less to the banks’ profits.
Check your MoneyBrilliant profile and see how much interest you paid on debt products in the last twelve months.
Transaction account fees & introductory rates: The banks use introductory rates to lure customers to their transaction and savings accounts. After a while though, these rates are dropped back to the standard rate. We’ve found that if you ask to be put back on the introductory rates, it’s likely you will be accommodated. Also, shop around for a fee free transaction account, you could save yourself $100s over just a year.
Check your MoneyBrilliant profile and see what transaction account fees you paid in the last twelve months.
Did you know……? Australian banks are effectively the most profitable in the world. According to the Australian Institute, Australian banks’ profits equate to 2.9% of our Gross Domestic Profit (GDP) where GDP represents the total dollar value of all goods and services produced over a specific time period. This means $2.90 from every $100 of profit earned in Australia is pre-tax bank profit.
Jen is an experienced banking professional who loves wine, coffee, finding a bargain and of course her three beautiful children. Since Jen's first budget led her to buy a home at 20, Jen has passionately helped others to make better decisions with their money.