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.

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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.

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.

Personal Loans: Over the last year, variable rates for personal loans have crept up with the average secured personal loan rate now 6 basis points higher, and unsecured rates a whole 39 basis points higher, perhaps reflecting an increased premium for risk. Greater Building Society sharpened its rates across all personal loans, reducing their unsecured fixed rate from 13.15% to 12.99% and now offering 8.99% for fixed new car loans.

Credit Cards: Credit card rates have been quiet recently with the only point of particular interest being Commonwealth Bank launching its Diamond Awards Credit Card. Diamond Awards has an annual fee of $425 and an interest rate of 20.74% for purchases, but you can earn up to 3 points per dollar when using the American Express card, and has a high points cap of 1 million per year.

Term Deposits: Anticipating the November RBA rate cut, term deposit rates moved sharply down. Looking over the last year paints a stark picture. While the cash rate rose 0.25% between October 2011 and a year earlier, average term deposit rates were down 0.53% for 1 year investments, 0.84% for 3 years, and 0.70% for five year terms.

Savings Accounts: In contrast to term deposits, at call deposit rates have been increasingly generous. As competition intensified the average rate went from 4.94% to 5.37% over the last year, an increase of 43 basis points compared with the cash rate’s increase of 25 basis points over the same period. Early indications are that this may not last with one of the main players, UBank, cutting its USaver bonus rate from 6.51% to 6.11% following the November 2011 cash rate cut.

Check back next month as we bring you highlights of the fallout from the latest Reserve Bank cash rate cut!

This represents the largest financial conversation in the country, and importantly provides Mozo with unique insights into customer satisfaction in personal banking in Australia. These insights are available in our Mozo Customer Barometer reports.

So, what has 12 months as a fly on the wall revealed?

Big 4 vs other banks versus mutuals

Mutual organisations rated significantly better than other groups of providers. Smaller banks were preferred over the Big 4. No surprises there!

The average overall rating of Mutuals was 8.18 compared with 6.87 for the Big 4 Banks and 7.49 for other banks.

Looking deeper than just the averages scores, we divide individual customer ratings into three bands:
Fan = a score of 8 or more
Fair = a score between 5 – 7
Fail = a score 4 or less

Just on 75% of all Mutual customers are Fans; only 50% of Big 4 bank customers are Fans. That’s a big difference, but even so it does mean that half of the customers of the Big 4 still rate their overall satisfaction at 8 out of 10 or more.

But the damage is done in the “Fail” ratings. Big Banks are three times more likely to receive a “Fail” score compared with Mutuals.

The Big 4 break-up

There has been a distinct shift in Big 4 ratings over the past 12 months.

On Valentines day this year, NAB officially broke up with the other Big Banks and is now pulling out in front as the only Big bank to rate an average above 7. One year ago, ANZ was the highest rated of the four.

The overall ratings for the big 4 are: NAB 7.09, Westpac 6.91, ANZ 6.84, Commonwealth Bank 6.78.

Customer Chatter

In addition to ratings out of 10, we also collect written reviews from bank customers. The following word clouds highlight the most commonly used words for customers who gave their provider a Fan or Fail rating. There are some very interesting differences between the two.

Like to know more?

If you’d like a free copy of our Mozo Customer Barometer (Personal Banking Overview) report, send an email to barometer@mozo.com.au.

We also offer Mozo Customer Barometer reports focusing on satisfaction within individual product areas, and can provide customised reports or data.

For those who live under a rock, the People’s Choice Awards are like parent-teacher night for bankers, with a dash of ‘financial Logies’ glamour. A massive 23,000 votes were cast (in the form of ratings from banking and insurance customers around Australia) to determine the best performing providers. Mozo’s election officials counted the beans and certified the results.

And the big winners?

The Greater Building Society achieved a record average rating of 9.2 out of 10, and scooped the Awards of Best Building Society, Best Home Loans and Best Savings Accounts.

ING Direct was voted Australia’s Best Bank for the second year running for its consistently competitive products, and also scooped Best Bank Accounts and Most Trusted Bank.

Victoria Teachers Credit Union was again voted Best Credit Union with a towering rating of 9.1 out of 10, and earned the extra credit of being the only provider not to receive a rating less than 5.

The top 18 providers all scored an average rating above Mozo’s ‘Fan’ score of ‘8 and above’, while the next 24 managed the ‘Fair’ score of ‘5 to 7’.

As for the losers, well, not everybody’s going to be happy with their report card. The Big Four as a group performed rather averagely, although there were winners and losers amongst them. Westpac scooped the awards for Best Term Deposits and Best Personal Loans,while the Commonwealth Bank copped a caning for its super sized home loan rate rise last November, being rated Australia’s worst home loan provider and worst Big 4 bank.

NAB marketed ‘break-ups’ and ‘asterisk-killing’ instead of mega rate rises, and won fans as a result. NAB’s average customer rating climbed to 7.1 out of 10, vaulting it to pole position as Australia’s favourite Big 4 bank.

And at the bottom of the pack? American Express gained more than a point over last year’s rating but still only managed 5.6 out of 10, while HomeSide, Citibank and GE Money each ended up with a ‘Fail’ rating of below 5 points.

The average rating for the whole class fell from 7.4 in 2010 to 7.2 in 2011, which suggests that less empty marketing hype and more real actions that benefit customers are needed in 2012.

For the full run-down of winners and losers, check out Mozo’s People Choice Awards page.

1. Be alert for new opportunities. As Richard Branson famously said, “Fortunes are made out of recessions”. Savvy entrepreneurs can take advantage of the lower barriers to entry and new market opportunities created by a downturn, with consumers and businesses all looking for the next big thing to help them cut costs and make money.
2. Don’t take big financial risks. Now is not the time to undertake capital-intensive projects or plough truckloads of cash into the launch of a new business. Re-evaluate any projects that require big ticket spending and find ways to scale back your plans and reduce costs without killing off the project altogether.
3. Adapt your marketing to the times. Put more focus on low cost, low risk marketing channels like PR, social marketing and search marketing and see if you can take advantage of struggling suppliers to negotiate ‘pay for performance’ contracts.  Downturns are also a great time to bargain for discounted advertising that you might not otherwise be able to afford.
4. Improve your cashflow before its too late. Consider offering an early payment discount or reward scheme to ensure you get paid as quickly as possible. If it’s been a while since you’ve run credit checks on your main customers, now is the time to run those checks again to make sure nothing’s changed.
5. Clamp down on day-to-day business expenses. Question all expenditure personally and set aside a few hours to shop around and see if you can get a better deal on your business banking, phone, Internet and utilities services.
6. Consider locking any excess business cash into a fixed rate term deposit. Experts are tipping a rate cut of up to 50 basis points in September, and some business term deposit rates are already falling, so if you’ve got spare cash sitting around act fast before rates fall any further.
7. Have an action plan to get your business back into warp gear as soon as conditions return to normal. Those that move the fastest will get the jump on their competitors and have the opportunity to make real headway while others flounder around with the blinkers on.

Do you have any tips of your own? Share your thoughts on our money Q&A forum, Mozo Answers.

Mozo’s car insurance section is now bursting with the ratings and reviews of over 3,500 real customers from the Mozo community – rating Aussie car insurers on price, features, convenience, service – the whole shamozzle.

Now, for the first time, you can compare comprehensive car insurance on not only product features, like no claim discounts or choice of excess, but you’ll also see exactly what existing customers think of their policy.

Of course, with all those ratings also come rankings – the best and worst of the car insurance scene – and we’ve tallied them up for all to see. Check out the crème de la crème below…

Top 5 Car Insurers (with 30 reviews or more)

1. Shannons: 8.9 out of 10
2. Apia: 8.8 out of 10
3. Youi: 8.3 out of 10
4. Suncorp Insurance: 8.3 out of 10
5. Real Insurance: 7.9 out of 10

Congrats to specialist insurers Shannons, who are narrow leaders of the Australian car insurer showdown – scoring big for their “dedicated service for car enthusiasts”…

‘Pros: Easy to get to on the phone (not waiting for 1/2 hour), polite phone staff, question free claims, not bugging me every month with sales crap. Cons: A bit more expensive than the internet style insurance companies (eg: insuremyride)’ – Brenton from SA

Not far behind, Apia also scored big with their over 50s customers, whilst for the non-specialised insurers, it was great to see new players Youi and Real scoring very well. In position four, Suncorp was the first in the list of the multi-talented banking/insurance providers.

When I had an accident, YOUI were very quick in responding, the customer service person is very sympathetic and knows how to handle the situation, she was so helpful, friendly and sent me a little gift pack as I had a very traumatic experience – Michelle from VIC

We think this is a great tool for all Aussies looking for new car insurance (or just checking how their current insurers stack up against the competition). So next time that policy of yours is up for renewal, be sure to compare car insurance on Mozo.

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Join the fight! Rate your bank or car insurer now to help decide the winners of the Mozo People’s Choice Awards for 2011.