Switch Banks?

Financial experts are blaming customers for the treatment they receive from banks.

With interest rates being raised higher than the official rate rise enforced by the Reserve Bank, the experts point the finger at customer “laziness”. According to them we should be playing musical banks – shifting our money and our debt every time we think our financial institution has done the wrong thing.

Maybe these experts would be more helpful if they visited the real world occasionally. Changing banks isn’t as simple as changing your regular newspaper or supermarket. There are no financial penalties imposed when you switch from Coles to Woolies or vice versa. There are no time issues or forms needing to be completed when buying a Herald instead of a Telegraph.

And what difference is there between banks? Most are pretty much the same and usually play follow the leader whenever there are changes. And are we expected to switch back to our original bank next time there’s another change?

Yes we can all turn to credit unions or building societies or one of the smaller community banks – but often they are very localised institutions with limited accessibility.

No. The problem isn’t caused by customer laziness. It is caused by greed. It is caused by highly profitable institutions pushing for more and more profit while providing less and less services to their customers; and decreasing loyalty to their staff who are often treated as disposable.

Unfortunately it is not only the banks playing this game of excessive greed. The power companies are also getting in on the act. Record profits merely increase the greed leading to a search for new ways of ripping off the customer. But there’s not much we can do when held to ransom by these essential services.

What made all of this possible?
I suspect the privatisation of the Commonwealth Bank started the ball rolling many years ago, and now its probably too late to slow the momentum.

Increasing Interest Rates

I'm no financial wizard, but the following observations seem blatantly obvious to me.

1) The RBA has just raised official interest rates again

2) Despite the rise, current interest rates are not particularly high

3) While lower interest rates are always helpful to those in the early stages of a mortgage, they are not particularly helpful to those who are trying to save the deposit for their first home, neither are they helpful to those relying on interest from their savings as a supplement to pensions or other low incomes.

4) Lower interest rates do not make home ownership more accessible. They merely help push up the price of properties as they give an illusion of temporary affordability. For some reason a booming property market is seen as a good thing, maybe because the financial wizards who report and comment on these things gain financial benefit from increasing property prices - too bad for those who are merely looking for a roof over their head.

5) Mortgages obtained when interest rates are low are dangerous. Financial difficulties are guaranteed when interest rates inevitably rise.

6) Current struggles with mortgage payments are NOT caused by the interest rate. They are caused by the higher amounts that have been borrowed, made accessible by the lower interest rates.

7) Abnormally low interest rates help to get people into more debt than they can hope to handle.