the mozo blog

This is a round-up of rates in January and some may have changed since the time of writing. To check on today’s rate, click on the highlighted product

Home Loans:

There wasn’t much movement in home loan rates in January which was expected after all the activity responding to the two rate cuts last year.  Instead we saw some trimming of variable rates and jockeying for the title of lowest fixed rates.

Most of the variable rate action occurred in package rates rather than standard variable offerings. Non-bank lender Better Option joined the bunch of lenders matching UBank’s UHome Loan 6.14% rate, but new kid on the block, My Mortgage Freedom, retained the cheapest variable rate at 6.10%.

Previous market leader Greater Building Society increased its 1 year fixed package rate from 5.69% to 5.84%, leaving the best fixed rates for loans of $300,000 to Better Option, Newcastle Permanent and Reduce Home Loans – all at 5.79%.

Personal Loans:

Finally some movement in Personal Loan rates as the RBA cuts slowly start to flow through. Westpac seems intent on becoming more competitive in the personal loan space, cutting rates across its personal loan products.  The Westpac Personal Flexi Loan rate was slashed by 1.70% to 12.99% and its Unsecured Fixed rate was cut to 13.99%.

This still leaves them some way off the pace compared with other lenders though with a range of options near or below 13.0%. For example, Newcastle Permanent cut their Unsecured Fixed rate from 12.99% to 12.74%.

Credit Cards:

All of the competition in Credit Cards seems to be focused on low rate cards while customers with rewards credit cards have seen precious little of the RBA cuts.

Community First’s McGrath Pink Visa card is the only card on our site with a rate under 10% after they passed on both of last year’s RBA cuts. The card was at 10.49% but is now down at 9.99%. Of the major banks, NAB’s cut of 0.25% taking its Low Rate card to 13.24% is the only change we’ve seen. In the Rewards category Jetstar’s Mastercard rate was cut from 13.99% to 13.49%, although the rate reflects the card’s much lower earn rate than most cards with rewards.

Savings Accounts:

The biggest move in Savings Accounts during January was RaboDirect’s decision to return to offering an introductory rate. The RaboDirect High Interest Savings now pays 6.01% for the first four months, dropping back to 5.4% after that.  UBank headed in the opposite direction, shaving 0.1% off its headline rate to 6.01% (deposit conditions apply).

Overall we’ve had two cash rate cuts in the last 12 months totaling 50 basis points, yet the average rate on savings accounts has come down only 36 basis points, so there are still plenty of appealing deals on offer. Check them out using our Savings Account comparison tool.

–

The banks have been making noises warning that they may not pass on future rate cuts so all eyes will be on the February RBA meeting today to see what they do. Regardless, from what we have seen over the past few months, many people with credit cards and personal loans have already been left in the cold with little or no benefit from falling rates.

Thinking of buying that dream home this year? What about annihilating your debt for good? Don’t rely on luck to stay on top of your money matters. Read our fun infographic to roll your way to financial health in 2012!

This is a round-up of rates in December 2011 and some may have changed since the time of writing. To check today’s rates click on the highlighted product.

Home Loans:

The only lender that didn’t pass on the full 25 basis point RBA rate cut in December was RAMS which only passed on a 20 basis point reduction. RAMS has been busy repositioning itself as a full financial services provider with the launch of new deposit accounts late in 2011 (see the Savings Account section of this article for more).

UBank (the online subsidiary of NAB) currently offers the best variable home loan rate as its usual requirement of having the loan for 3 years to receive a loyalty discount of 0.20% continues to be waived. We’re not sure how long this will last, but applicants currently get the discount for the life of the loan with no waiting period meaning the variable rate is just 6.14%, compared with an average standard variable rate across the market of 6.94%. The offer is a little restricted though as their loans are only available to people refinancing and not new loans.

Fixed home loan rates stopped falling in December unlike previous months when we had seen quite large movements. The average 1 and 3 year fixed rate were down about 10 basis points, and there was virtually no movement in fixed rates from the major banks.

Personal Loans:

Despite the two rate cuts late last year there has been little benefit passed on to personal loan customers. The average secured variable rate loan has only moved down 11 basis points over the past year, and unsecured variable rates have actually gone up! The best rates are offered by credit unions, whether looking at secured or unsecured.

Credit Cards:

As for personal loans, credit card customers have every right to feel they are getting a raw deal. The average credit card rates barely moved in December and even over the longer term are fairly static. Last month this blog singled out QANTAS Staff Credit Union for an honourable mention, having passed on November’s rate cut to their credit card customers, and they’ve done it again in December. Its Lifestyle Rewarder is one of the cheapest credit cards with rewards on the market, now at 13.49%.

Savings Accounts:

The heat has certainly come out of the savings account market with the average rate down 39 basis points in December alone, although some of this decrease may have been due to delays in passing on the November rate cut.

The best introductory rate accounts are currently offered by RAMS (6.12% but only to RAMS home loan customers) and UBank (6.11%). Interestingly these are both owned by major banks – Westpac and NAB respectively – so it seems there is real competition between the majors, but through their alternate brands more than their own. ANZ is taking a different approach, offering the third best rate in the market of 6.00%, but through its own brand rather than its online Smartypig brand.

Term Deposits:

There are still some great term deposit rates to be found as they haven’t been falling as fast as either at-call deposits or home loans. If the RBA continues its downward movement of the cash rate over the next few months now might be a good time to pull some money out of at-call accounts and have some assurance of your interest rate.

The best 6 month rates at the time of writing were UBank’s 6.11% and ING Direct’s 6.00% while the best 1 year deposit rate is 5.50% offered by Police Credit Victoria and Credit UnionSA, and a range of others close behind. Check out our Term Deposit selector tool to find the best rates for the term that you’re interested in.

Although the RBA has a month off from meeting to review the cash rate in January the Mozo RateChasers will be keeping a keen watch to see if the banks are going to do the right thing and pass on the same reductions to credit card and personal loan customers as the have for those with home loans.

On Mozo Answers we’ve had a lot of questions about Visa payWave and MasterCard PayPass credit cards. As more and more providers are making “tap and go” a mandatory feature of credit cards, it’s important to know what it’s all about.

A common query that has popped up on our forum is around security and cover, such as “am I protected against theft” and “am I covered for fraud?” These are valid concerns and we’ve decided that it’s about time those lingering questions about “tap and go” credit cards are answered. Below are some of the most popular queries in regards to payWave and PayPass credit cards:

What is payWave and PayPass?
Almost all new credit cards come with either the Visa payWave or MasterCard PayPass feature. It’s a simple way of purchasing items under $100. You can either tap or hover your credit card up to 4cm away from the terminal and your transaction is processed without a pin or signature.

A lot of retailers are taking on this new payment method, to reduce waiting queues and cash handling. At the moment many of the large outlets have the “tap and go” option, such as Bunnings, JB Hi-Fi, Caltex, 7-11 and McDonald’s (and many more).

How it works: Visa payWave and MasterCard PayPass credit cards allow you to “tap and go” due to the embedded near-field communication (NFC) chip, which transmits your information to the POS terminal. There is also a radio antenna embedded into the credit card that sends radio frequencies, allowing contactless payments.

Is it secure?
It won’t be long until you have your first experience using a “tap and go” credit card. You’ll enter your local 7-11, go up to the counter and tap your credit card against the POS terminal, without a pin or signature. And you might ponder is this really safe?

There are several precautions credit card providers have put in place to protect you from any theft or fraud:

• It has to be up to 4cm away from the reader, to ensure you don’t accidentally pay for another person’s transaction
• The same transaction cannot be put through twice due to a unique authentication code for each sale
• All Visa payWave and MasterCard PayPass credit cards use secure encryption (cryptographic key) technology, which gives you data protection and transaction security
• It is always in your hand as the transaction is processed
• “Tap and go” credit cards use the same network as swipe credit cards

It’s unlikely that any crim can do considerable damage using the “tap and go” option of payments under $100. However it’s important to be aware of your spending, by checking your transactions regularly and informing your bank of anything out of the ordinary. Most thieves will act in the first 48 hours, so the quicker you catch them out, the better.

Am I covered?
All the credit cards we looked at with Visa payWave and MasterCard PayPass are covered by a zero liability policy, which means you are protected against unauthorised transactions or fraud, with 100% reimbursement.

Most of the credit cards provide protection for in-store transactions, online transactions, phone transactions, and overseas and domestic transactions. It’s important to check your monthly statement for any fraudulent activity because some providers state that it has to be reported within a reasonable period of time (and this can vary with providers).

Watch out for exclusions of cover! Some zero liability policies don’t provide cover for ATM and Eftpos transactions.

Can I disable the paywave/pass feature?
Unfortunately, the short answer is no. You can’t disable the payWave or PayPass feature on your credit card and most replacement credit cards come with the feature.

It is a reality that the “tap and go” credit card option is going to be used in most retail outlets in the future. Did you know there’s even going to be a credit card released that you can use to “tap and go”? As technology changes the Mozo team is here to give you the facts. If you still have any queries about payWave and PayPass credit cards check out the Mozo credit card payWave and PayPass guide.

Mozonians are always looking out for great deals or ways to save money! And we all know that travelling isn’t exactly cheap. So it’s important for any savvy traveller to be aware that many credit cards include free international travel insurance. And yes, there are usually annual fees and interest rates but the benefits can be worth it!

Team Mozo has poured over five different gold credit card insurance terms and conditions (not an easy task), to give you all the info you need to know about gold credit card travel insurance.

Below are the gold credit cards we looked at:

St George Gold Low Rate credit card
NAB Gold credit card
Commonwealth Gold Low Rate credit card
Bankwest Breeze Gold credit card
AMEX Gold credit card

Who’s covered

Bring your family! In all five gold credit cards the card holder, spouse and dependent children are covered. However, there are certain eligibility requirements to keep in mind.

Eligibility

All the gold credit cards we took a look at require some of the travel expenses (travel ticket, accommodation or itinerary items) to be paid on the gold credit card. Keep in mind there is also a minimum amount to be paid on the credit card per person travelling to ensure they’re covered.

The AMEX Gold credit card and the St George Low Rate credit card both require you to purchase each persons return overseas travel tickets on your gold credit card prior to leaving Australia.

Not all credit card travel insurance is linked to airfares! The NAB Gold credit card allows you to pay a minimum of $500 per person in general prepaid travel expenses, accommodation cost or land tour costs to be eligible for coverage.

You can also pay for accommodation on the Commonwealth Bank Gold to meet the eligibility requirements. It’s a bit pricey though! A minimum of $950 has to be spent on each return travel ticket or other expenses (accommodation, itinerary items). If you choose to go with the airfare only option they do have an alternative clause, where you can pay 90% of each persons return overseas ticket to be covered.

Stand-out:

The lowest eligibility requirement is the Bankwest Breeze Gold credit card, as only 75% of your return travel ticket has to be paid on the credit card for insurance.

Excess
Paying excess usually can’t be avoided if you need to make a claim! St George Gold Low Rate, NAB Gold and Bankwest Breeze Gold all have a general excess of $200. However, with each gold credit card there are some items that are exempt.

The St George Gold Low Rate and the Bankwest Breeze Gold credit cards both have no excess for loss or damage to personal property (travel documents, credit cards, emergency replacement of clothes and toiletries).

NAB has quite a few items that are excluded from excesses: travel delays, resumption of overseas journey, return of rental vehicle if you are unwell, baggage and personal items, fragile items, and wear and tear from atmosphere or climatic conditions. Phew!

On the other hand, the Commonwealth Gold Low Rate has a general excess of $250 for things like medical and like the other gold credit cards there is no excess for damage to personal items. There are smaller excesses of $150 for unexpected cancellation of travel arrangements and other unexpected expenses, resumption of journey and special events.

AMEX Gold has specific excesses according to what is to be covered. Medical cover has an excess of $500, baggage and personal $100 and your laptop $250.

Expiry Date
St George Gold Low Rate, Commonwealth Gold Low Rate, Bankwest Breeze Gold and AMEX Gold all have a 3 month expiry date. This means that if you’re planning to travel for more than three months consequently you may have to purchase stand-alone travel insurance because the majority of gold credit card travel insurances cannot be extended.

Stand-out:

The only gold credit card out of the five to have more than 3 months cover is NAB Gold, with an expiry date of 6 months. That can make quite a difference if you’re going on a world cruise!

Medical
Medical insurance is one of the most important covers, especially in countries like the US where medical insurance is a must. Thankfully, there is unlimited medical cover on the St George, Commonwealth and Bankwest Breeze gold credit cards and NAB Gold covers actual incurred costs.

All the gold credit cards state that they will not cover pre-existing medical conditions, such as asthma or diabetes. And remember the devil’s in the detail! There are several terms and conditions to watch out for in regards to medical insurance. Many credit cards will not provide medical coverage for special sports or extreme sports, so if you’re thinking of going skiing and conquering the black slopes, be sure to check your coverage!

The Amex Gold has a $2.5 million limit on medical cover. We know this might sound like a huge amount, but if other gold credit cards are offering unlimited cover, it doesn’t quite stack up. Especially if you have a freak accident, that requires expensive medical procedures. You might be a bit huffed if the $2.5 million doesn’t cover the costs!

Baggage and Property
St George Gold Low Rate and Bankwest Breeze have the same cover for baggage and property, such as $10,000 per person and $15,000 for the family. The Commonwealth Gold Low Rate has slightly higher cover for a family with $20,000 but still capped at $10,000 per person. The NAB Gold has the highest cover for an individual with $15,000 per person and $20,000 for a family.

Stand-out:

AMEX Gold has the same cap of $10,000 in total overall per person. But the great thing is that there isn’t a family limit. So if you’re travelling with your partner and two children as a family you’ll be covered for $40,000.

While travel insurance differs between gold credit cards, all in all most coverage stacks up well and if you find the right one for you and your trip, there’s certainly some gold to be found! Stay tuned for our next blog when we put platinum credit card travel insurance to the test!

As 2012 is fast approaching and we are getting ready to sing in the New Year, we thought it was a great time to give you our picks of the best (and worst) banking products of 2011. The Mozo team has scoured the market with a fine-tooth comb, patiently reading product disclosure statements and comparing interest rates to bring you the results.

Some top stand-out products have been released throughout the year, with many bank accounts, home loans and credit cards receiving a big thumbs up. However, with every great product, a not so great product slips its way into the market. And for those that don’t make the grade, the Mozo team has our wooden spoon ready!

Best Bank Account
We love anything fee-free! Launched this year, the Citibank Plus Transaction Account ticks all the boxes for a great everyday banking account. The account has no monthly account fees, and fee free ATM withdrawals within the Citibank network in Australia which includes Citibank, Westpac and St George ATMs. But the real game changer is that this bank account has no overseas ATM or purchase fees (these can be as high as $5 per transaction with some accounts) which makes this a great bank account for jetsetters and homebodies alike!

Some banking providers missed the fee-free memo this year! The Wooden Spoon Award goes to HSBC for its Savings Cheque Account. Not only are customers charged a $7.50 account fee (waived if the balance is always over $1000), the account only has six free ATM and Eftpos transactions a month, after which you are charged $2 for every other transaction. Ouch!

Best High Interest Savings Account
And the best savings account goes to… RaboDirect! Unlike other banks who only offer high interest rates for the first few months to new customers, RaboDirect’s High Interest Savings Account rewards savers with a competitive ongoing interest rate of 5.75% (with balances of up to $200,000). The savings account has other great features such as no minimum balances and no account fees.

The normally fantastic Bankwest has landed itself a Wooden Spoon Award for its Regular Saver Account. The savings account has a high interest rate of 6.50%, but the fine print reveals that you can only get this rate by depositing between $50 and $500 each month. What’s more, after a year the entire balance is swept to a nominated account so you have to start building your balance again!

Best Rewards Credit Card
This year our vote goes to the Qantas Amex Discovery Card for the best rewards credit card. It is one of the few cards that will earn you 1 Qantas Frequent Flyer point for every $1 you spend on the card and it has no limit on the number of points you can earn in a year.  But best of all the Qantas Amex Discovery Card has no annual fee. When you consider most rewards cards have annual fees of around $150 this is a great saving which you can put towards your holiday spending.

Best Credit Card
Aussies love to travel and with the increased popularity of online shopping, finding the best credit card for you can make a huge difference to your finances. The 28 Degrees MasterCard has some great features for savvy travelers and shoppers which puts it at the top of our list:

- 100% free to use in Australia and overseas
- No overseas transaction or foreign currency conversion fees
-You can put credit in it before you start your trip.

Not to its usual great standard, Macquarie Bank increased its RateSaver and Gold credit cards by 0.25% after the RBA cut in November earning it our Wooden Spoon Award.

Best Mortgages
Loans.com.au and State Custodians are small players offering big savings in the home loan market! By not using brokers they’re able to offer competitive rates direct to borrowers – up to 0.75% below the average standard variable rate . You’ll have to spend time filling out the paperwork but the savings you’ll make will be worth it.  For example, if your current home loan is with Westpac on the Rocket Repay Home Loan at 7.61% ($300,000 over 25 years), you can save over 70K by switching to these low rate providers.

The ‘fixed rate revert rort’ is a sneaky tactic by banks. They provide low fixed rates for the first few years and then revert to high variable rates once the fixed period is over. Citibank gets our wooden spoon for its fixed rate loans. For instance its 3 year fixed rate of 5.94% reverts to 7.77% for the rest of the loan.

Finding the right product in 2012
With so many products in the market, the search for the right credit card, bank account or home loan may seem daunting but Mozo has all the tools you need to tease out the “gotcha’s” and find the best deal! Head to Mozo now >>>

This Rate Chasers Roundup is a summary of rates movements in November 2011. To check today’s rates click on the highlighted product.

Home Loans:

Most lenders have now moved their variable rates following the Reserve Bank’s reduction in the cash rate early in the month. The only bank not to cut its variable rates by the full 25 basis points was NAB who, although still having the lowest standard variable rate of the big 4 banks (now 7.47%), only took 20 basis points off its rates. Perhaps to balance this NAB’s online subsidiary UBank has jumped in with one of the lowest variable rates around at 6.39% with its UHome Loan. Usually borrowers would have to pay 0.20% more than this for the first 3 years before qualifying for the ‘loyalty’ discount, but UBank is now offering this discounted rate to its first 1,000 successful applications.

Fixed rates continued to fall during the month with quite a few 1, 2 and 3 year options at around 6.0%. Better Option offered the best 1 year rate at 5.84% and the best 3 year rate at 5.89%, while Greater Building Society had the sharpest 2 year rate at 5.94%.

Personal Loans:

Unlike home loans, many personal loan rates have not yet benefitted from the Reserve Bank rate cut as evidenced by the average secured variable rate only coming down 8 basis points during November to 10.79%. The main area for competition in personal loans has been the fixed rates on secured loans where a number of lenders have passed on the full rate cut. Over the month we saw the average rate fall from 10.88% to 10.74%, with a range of offers coming in under 9%.

Credit Cards:

This is the product group that has benefited least from rate adjustments and during November the average rates barely moved. For credit cards with rewards the average rate went from 19.54% to 19.52%, and for cards without rewards the average rate went from 15.06% to 15.03%.

Qantas Staff Credit Union customers with its Lifestyle credit card have a reason to smile – its already low purchase rate of 13.99% was reduced to 13.74%, one of the few credit cards with a rewards program to feel the full effects of the lower cash rate.

Of the big banks, the only change we saw was ANZ cutting the rate on its Low Rate card by the full 25 basis points to 13.24%, although the rates on all of its other cards have not been adjusted.

Savings Accounts:

Unlike personal loans and credit cards, there’s been no hesitation in passing the rate cut on to savings account customers. During November the average rate fell by a neat 25 basis points, but this hasn’t been uniform across all products.

The market leaders for introductory rates for online savings accounts, UBank and Virgin Money cut their rates by 40 and 39 basis points respectively, leaving Virgin Saver on 6.12% and USaver on 6.11%. Both of these accounts are now beaten by HSBC’s Serious Saver on 6.20%, but as with all high introductory offers it pays to check what rates are paid beyond the introductory period.

Term Deposits:

As markets are anticipating more rate cuts and competition for deposits is easing, term deposit rates are continuing to move down.  Only small premiums are being paid for locking your money away for longer terms at the moment, making shorter terms seem the best value.

Over the last year the average rate for 6 month deposits has only fallen 9 basis points, however the average 1 year rate is down 71 basis points and the average 3 year rate has fallen 85 basis points.

For deposits of $10,000, the average 1 year rate is 5.22% but the best rate in November was QANTAS Staff Credit Union’s 5.70%.  For 3 year deposits the average rate is 5.34% and the best rate was 6.00% from Bank of Cyprus. Bank of Cyprus also payed 6.00% for 6 months.

The Mozo Rate Chasers will be keeping a close eye on whether the banks eventually pass the rate cut on to their credit card customers, and who benefits (and who misses out) if there’s another cut when the RBA meets on December 6. Whatever happens in the world of rates, we’ll have all the latest here.

Guest Blog: Kylie Ofiu

On my recent trip to America I did a bit of research into what was the best way to  use my money while there. I found my bank didn’t charge much for transactions, but if I wanted to withdraw US dollars from them before leaving they would charge me an arm and a leg.

There are a few things you can do to save on fees and charges when travelling overseas.

1. Compare banks

Different banks charge different fees for different things. You might find one bank has high fees for using ATM’s overseas, (as much as $5) but their over the counter currency conversions are really cheap. Find out which one has the best deal for you and use them.

Banks often charge these fees, but also a fee when changing the currency as well as a commission for converting the currency which can be anywhere from 1.5% – 3.65%. You can compare these fees with the Mozo debit card fee finder.  Getting it right can save you a lot.

2. Negotiate

Try negotiating with your bank. If you find a better deal elsewhere ask your bank if they will match or beat it. It is cheaper for them to keep a customer rather than try and get a new customer, so it is in their best interests to keep you happy.

3. Get the right cards

I say cards because not all cards are accepted everywhere. There are 4 different types of cards you can use overseas: prepaid travel cards, credit cards, debit cards and you regular ATM card. A prepaid card is just like a credit card except you put your money on it before you go. Credit cards are great as they are easy to replace and many such as AMEX have excellent reward schemes attached. A debit card enables you to use your money, but it can be used as a credit card. A regular ATM card is your own money again, but the fees can be steep.

Compare different cards to find which will be right for you, or take a couple of options such as a credit card and a prepaid card.

4. Deal in large sums of money

To really avoid transaction fees deal in large sums of money. This can be risky as you are carrying around cash instead of a card, and you cannot get cash back if it is lost or stolen, whereas you can cancel credit cards, get them replaced and prove certain expenses were not made by you.

Taking out a large sum of money at one time instead of regular smaller sums means you will only have one transaction fee instead of several.

Kylie Ofiu is an author, blogger and writer. On her blog she writes about ways to make and save money.

Guest Blog: Kylie Ofiu

Many of you are undoubtedly aware of credit card purchase protection. I know not everyone has it, but when you look at what is on offer from some of the companies now it can be well worth it.

Traditionally credit card purchase protection has only really covered you if goods were lost or stolen in a set time frame, but now there are so many more features included, such as price protection, and some even offer it for free with the card.

What kind of features and why should you bother?

What if you could be guaranteed to never miss out on a sale? No matter what, you will always get the best price on an item. How? Well there are some cards now which allow you to claim back the difference in price if you purchase an item for a certain price than see it on sale later, sometimes for just 1 -3 weeks after, sometimes much longer.

For example, you purchase some swimmers at David Jones, then the next week you see the exact swimmers on sale for $50 less. You contact your credit card company, use the credit card purchase protection and you get refunded the $50! How amazing is that? Even if there was a small monthly fee for it, as is the case with some cards, it would still be worth it.

Even larger items like washing machines are included which means you could save hundreds of dollars by paying with your credit card and keeping an eye out to see if what you bought goes on sale later.

What is even better is it’s all done online and as long as you are keeping track of your finances, what you buy and how much you pay, it will be easy to use your credit card to make your money work hard for you.

**Mozo EDITOR’S NOTE**

Some of the credit cards offering shopper’s purchase protection include:

• Bankwest Breeze – claim the difference if you buy goods within 21 days. Also available with Breeze Gold and Breeze Platinum cards.
• GEM Visa Card has an optional insurance cover. The premium is just 1% of the monthly closing balance (capped at $50).
• NAB Gold Card – complimentary price protection insurance . Get reimbursed the difference between the price you paid for a new item and a lower printed advertised price for the same item.

Kylie Ofiu blogs about ways to make and save money at her site Kylie Ofiu She is also the author of 365 Ways To Make Money and a freelancewriter.