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Money musings, financial commentary plus the rambling wit and
wisdom of the team from Mozo - Australia's money info zone

Commonwealth Bank Shows Its True Colours

By Yash Murthy 09 May 2011 4:45pmATMs, Bank accounts, bankingTag: > >
According to its latest marketing campaign, Commonwealth Bank is “determined to be different”. All shot artistically in black and white, the TV ads feature mildly offbeat situations featuring the likes of a bulldog and a fainting housewife to highlight the bank’s superior customer service. However in light of recent events relating to its ATM glitch, is this shiny black and white veneer a mere facade? 

Let me set the scene. It’s just another sunny, Summer day when suddenly ATMs all over Sydney and Melbourne start spouting free money. A tech glitch has allowed Commonwealth Bank customers to significantly over-withdraw their accounts at Commonwealth ATMs. The glitch was fixed within a few hours, but in that time hundreds had profited from this fortuitous malfunction.

What does the bank that is “determined to be different” do?

For starters, Commonwealth issued a forceful statement, making it sound as though Sydney had all of a sudden morphed into a scene reminiscent of German hyperinflation post WW1, with hordes of desperate punters strolling around Sydney with cash-filled wheelbarrows in tow; “Commonwealth Bank ATMs were not issuing free cash – some customers deliberately and systematically set out to withdraw money that wasn’t theirs.”

The reality is that whilst there were ‘opportunists’ (who really think they can get away with over-withdrawing their own account in front of an ATM security camera?) who knowingly attempted to rip off Commbank, a significant portion of people affected seem to be misguided Commonwealth Bank customers unaware they were committing a crime.

Commbank has since come after them with real gusto. Letters were sent out to affected customers, asking them to make lump sum payments in a very short space of time and threatening them with court action. The ABC reportedly saw a letter to a welfare recipient threatening court action unless a debt of more than $700 was paid within 10 days.

What the Commonwealth seems to be forgetting is that these people aren’t just random street hoodlums – these people are their customers. You’d think in the current era of fierce banking competition (not to mention their current ad campaign) that would count for something. Is taking customers, some of whom are pensioners and welfare recipients, to court a good look for the Commonwealth Bank?

Either way, Ralph Norris and co. seem hellbent on getting the money back ASAP. In my opinion, if Commbank really are determined to be different, they need to reassess their approach. Does the recovery of a few thousand dollars now as opposed to over a few months outweigh the damage to the brand’s image?

That being said, maybe they have succeeded in being different after all. I mean, only Commonwealth could manage to come out of this whole mess looking like the bad guys even though they’re the original victims!

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Glenn Stevens : Behind the Rate Rises

By Yash Murthy 20 April 2011 4:32pmbanking, finance, RBATag: > > >
Labelled by Kochie as “the person that nobody knows and yet the bloke who controls their lives”, Reserve Bank of Australia (RBA) Governor Glenn Stevens is a bit of an enigma. He’s a public figure, yet unlike most celebs we really don’t know much about him. However, with him recently becoming the Australian Public Service’s first million-dollar man, I thought it’s about time we lifted the lid on the real Glenn Stevens. 

The Beginning

Glenn was born in Sydney in 1958 where, contrary to popular opinion, he in fact wasn’t born wearing a suit and tie. He went through school and on to the University of Sydney to pursue his passion for economics. However, whilst strolling the university’s corridors, he carried a deep dark secret inside – that he wasn’t “particularly good” at maths – a potentially career-ending roadblock for a budding economist. Nonetheless, showing the steely resolve that was to become his hallmark, Glenn overcame his mathematical demons and graduated out of Sydney Uni with first class honours in economics, going on to complete a Masters at the University of Western Ontario in Canada.

source: http://inside.org.au/

The Rise to Power

Punctuated only by a brief sabbatical to San Francisco in 1990, Glenn rose meteorically up the RBA ladder before becoming head of the economic analysis department in 1992. Glenn was now on the fast-track to stardom and when Governor Ian Macfarlane resigned in 2006, Stevens finally found himself in the hot seat. Glenn Stevens had cracked the big time.

Welcome to the Good Life

With inflation well under control and Australia’s economy in reasonable shape having seen the back of the GFC’s worst, Glenn Stevens’ stewardship at the helm of Australia’s monetary policy ship is looking pretty rosy. And with his new million dollars plus a year pay packet, so is his bank balance.

Dark Days and Redemption

But it hasn’t always been easy. When the RBA was forced to make tough interest rate decisions at the peak of the GFC, the media vultures pounced, one newspaper asking the question “Is this the most useless man in Australia?” in reference to Stevens. Despite his rigid facade, Stevens himself admits that the comments during those dark times had an effect – “I’m a human being; these things hurt”. His response was to open himself up to the public, an effort that has seen his popularity soar and public image restored.

The Man Behind the Governor

Fast cars, fast women and even faster drugs. Glenn Stevens may be a public figure with means, but those are three things he has most certainly steered clear of. In the words of the man himself, “this [is] not the classic case of the terribly wayward life and in the later years seeing the light”. Rather, Glenn’s life has always been underpinned by family and faith. He’s very active in his local church in Sylvania Waters, and he attributes a lot of his success to the grace of God. Equally important is his family – his wife is actually such a big fan of his that she collects bank notes with his signature on it!

Not that Glenn doesn’t have his passions. He enjoys listening to jazz and also plays guitar in his local church band. In his downtime he also has a penchant for the Bond movies, perhaps where he gets his sophisticated yet understated sense of style from. Along the same lines, perhaps his greatest extravagance is his penchant for flying – he’s a keen aviator and even owns a twin engine plane. Watch out John Travolta, there’s a new famous airman in town! Perhaps Stevens’ retirement in 2013 will see him taking Travolta’s spot in Qantas ads!

Keen to see more of Glenn’s handiwork? Check out our Reserve Bank page!

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Whichever way you slice it, there’s a bank account for you!

By Yash Murthy 14 April 2011 3:55pmBank accounts, banking, personal financeTag: > > > > > > > >

I was at the ATM getting some cash out to pay for my traditional Sunday night pizza when it dawned on me that in a lot of ways, the different types of bank accounts are very much akin to different types of pizza, with the account as a base and the features as toppings. With Sunday’s pizza now just another delicious faded memory, I’ve decided to fully explore this notion and in doing so, identify the best slices of bank account goodness out there.

Slice 1: The Margarita

Sometimes the best pizza is the simplest, and there’s no simpler pizza than an old fashioned margarita. In banking terms, this is the standard transaction account which gives you full access via EFTPOS, debit card and branch but no interest paid on the account. Not all margarita pizzas are created equal mind you and my slice of choice is NAB’s Classic banking account. It’s got no monthly fee, unlimited withdrawals from NAB and rediATMs as well as unlimited free access to your money via EFTPOS, internet banking, phone banking, branch and cheque book. There are similar accounts such as the Suncorp Everyday Basics account and the Citibank Plus Transaction account, but NAB has the widest distribution of ATMs and branches.

Slice 2: The Supreme

If you’re the type who wants it all, from pineapple to parmesan, nothing beats a Supreme pizza. In banking terms, you’ll be looking for a bank account that not only acts as a transaction account, but also pays high interest. My choice of supreme is the AMP eASYSaver (you’ll have to forgive their appalling capitalisation policy in naming the thing though!). You get 5.15% interest on every dollar, unlimited free access through internet, NAB and rediATMs, EFTPOS and an optional free chequebook.

There are other high-interest transaction accounts such as the BankWest Hero account, but AMP has the highest rate as well as no conditions with regards to balances or deposits. One thing to note however, is that this account has a $5 monthly fee, so you’ll need to hold a balance of at least $1,200 at all times to make the interest cover the fee.

Slice 3: The Gourmet

If you see yourself as a bit of a gourmand, there are niche accounts providing extra ATM benefits on top of being great everyday accounts as well.

The Moroccan Lamb and Tandoori Chicken banking equivalents come hot from the ovens of ING Direct and BankWest. ING DIRECT’s offering is the Orange Everyday account. There’s no monthly fee and unlimited free ATM withdrawals at any Australian ATM if you withdraw more than $200. On top of that there’s unlimited free EFTPOS transactions and ING Direct even pays you $0.50 if you withdraw more than $200 through EFTPOS. A few of those and you’ve got yourself some free garlic bread!

The second slice of choice is the BankWest Zero Transaction Account. Again, there’s no monthly fee, unlimited free ATM withdrawals at any ANZ, Commonwealth, NAB, Westpac or BankWest ATM as well as unlimited free EFTPOS transactions. The only catch is that you need to deposit $2000 a month into the account to maintain it, otherwise you’ll be switched over to another BankWest account.

The Crust: Final Thoughts

So next time you’re siting idly at home waiting for the delivery boy to arrive, instead of wallowing in your own hunger, use the time to see if there’s a bank account that’s more suited to your taste. It’s a slice of advice that could make things a lot easier for you.

Still hungry for information on bank accounts? Finish off that pizza and head over to Mozo Answers!

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Rate of Origin

By Yash Murthy 16 June 2010 4:19pmbanking, competition, MozoTag: > > > > > > >

State against State. Mate against Mate. It’s a line that epitomises rugby league’s annual showcase of interstate rivalry, underscoring the passion and pride on display between the NSW cockroaches and the cane toads from Queensland. With rugby league’s annual State of Origin series now decided, it’s time to bring back the financial biff and pit the states head on!

Since Origin is about representing your state, community and people, we’ve decided to use what consumers have said about their banks hailing from each particular state to create an overall picture. So using the 30,000 bank reviews you’ve submitted, it’s time for Mozo’s annual ‘Rate of Origin’. State against state. Rate against rate.

With 7371 reviews behind them and big players like Westpac, Macquarie and St. George as well as no less than 4 credit unions on our list of the top 10 Australian banks in the side, NSW comes in as strong favourites. As always, Queensland are the underdogs, conceding a significant numerical advantage in both number of reviews (2416) and number of providers (10 to NSW’s 15). They’re led by Queensland stalwarts like Suncorp, Bank of Queensland and their sole representative in our top 10, CUA.

With the NSW camp already shattered and in turmoil after losing their fifth straight origin series, it will come as another body blow to the state and their footballers that NSW is getting dusted not only on the field but also in their wallets. NSW banks put up a solid if unspectacular average overall rating of 6.91, led by strong performances by Teachers Credit Union and the Greater Building Society. However, with old hands Suncorp and Bank of Queensland ably steering them round the park and strong efforts from CUA and Heritage Building Society, the banana benders have stormed home with an overall rating of 7.34 to claim the Origin title.

The real difference between the sides was the abject performance of Westpac, whose rating of 6.7 was the catalyst to NSW’s demise. If you remove Westpac from the equation, NSW’s rating rises to 7.25, a mere drop goal away from victory. NSW will be looking for Westpac to pick up their game over the next year to avoid the pain and humiliation of another Rate of Origin defeat.

So as the dust settles and the xxxx’s are cracked in bank head offices around Brisbane and wider Queensland after another fiery clash between these two interstate rivals, I implore all Origin fans out there to get behind your state and rate your bank to give your state a shot at Origin glory next year!

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Savings left for a rainy day

By Yash Murthy 03 May 2010 3:41pmbanking, Interest rates, Savings accountsTag: > > > > > > >

After much debate and conjecture, the Federal government finally issued what has been widely labeled as a cautious and narrow response relative to the broad and expansive scope of the Henry Review of the taxation system. Indeed, only a smattering of the 138 recommendations outlined in the review have been taken on board for this round of reform. Left off the list were the anticipated new tax concessions on savings. Attention instead turned squarely towards superannuation with Australia’s aging population looming as a big issue.

While a lot of the focus will be on the exclusions, there were some significant steps made towards reform yesterday, the three cornerstones being:
* A 40% tax on mining industry profits, labeled as a resource rent tax on their “super profits” and netting the government $12 billion in forecast revenue between 2012-13.
* Increasing the superannuation guarantee from 9% to 12% by 2020 with the government to contribute $500 for people earning up to $37000.
* A cut in the company tax rate from 30% to 28% by 2015. Small businesses will get the cut by 2013 as well as receiving a range of other new benefits.

The changes announced yesterday have been earmarked as the first step in a wave of changes in enacting revolutionary tax reform. The government has explicitly stated that there will be more announcements in the future on savings incentives, as one of central issues to be addressed in the government’s second term agenda. This still leaves both financial institutions and consumers in the lurch for the foreseeable future however. Many hoped that by increasing bank-held deposits, the saving concessions would help reduce funding costs by alleviating the need to rely so heavily on foreign debt, thereby reducing the need for banks to enact mortgage rate rises above that of the Reserve Bank.

So all up it’s much the same for most of the players in the banking sector, at least for now anyway. All eyes now turn to Martin Place tomorrow, as we see what effect these changes (or lack thereof), will have on the Reserve Bank’s monthly cash rate announcement. Mozo’s rate chasers will be out in force, so be sure to check our Reserve Bank interest rates page from 2:30pm tomorrow to get all the latest news and rate changes as they happen.

Banking comparisons made easy at mozo.com.au

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The Magical World of Interest

By Yash Murthy 01 April 2010 4:45pmbanking, Credit cardsTag: > > > > > > > > > >

As you may remember, a media firestorm erupted last week when Westpac announced it would charge interest on fees and interest on all Westpac Credit Cards. Westpac defended itself by saying this is standard practice among banks — but just how standard is it?

Well, it seems Westpac was right. Across the ‘Big 4′, interest is charged on interest and fees. And they’re not the only ones either, with the likes of American Express, Citibank and St George all guilty of the same tactics.

But this isn’t all — while digging into the fine print about interest and fees, I discovered a myriad of sneaky tricks banks use in charging customers. Forget the trivial feats of magicians and illusionists like Blaine, Copperfield or Criss Angel; for real trickery you need look no further than your monthly credit card statement.

For example, a widespread ace you’ll find up providers’ sleeves involves the specific debts your repayments actually pay off. Most cards’ conditions require your repayments to go towards those purchases that attract the lowest rate. This makes any purchases made at a higher rate more likely to attract interest charges, as they are the last to be paid off.

Another little rabbit in the hat is the date from which interest is charged. Instead of charging interest from the date a transaction is posted to your statement, some providers charge from the date of transaction. While there’s only a few days’ difference, it can add up, especially for larger purchases.

And then there’s the cleverest banking sleight of hand — the ‘prestige’ in magician’s parlance. The typical 44-55 days interest-free period on purchases is often viewed by customers as a breather between spending and interest charges. But quite often this buffer pulls a disappearing act. If your balance is not paid in full by the due date, you’ll lose your interest free days with Commonwealth, ANZ and Westpac. NAB is more lenient, but you still have to maintain your monthly minimum repayment.

So what does this mean for your bottom line? If you lose your interest free days, your bank will levy interest comprising a total of daily interest charges on your purchases going all the way back to the date of purchase. While NAB and ANZ only charge this interest on the overdue amount, Westpac and Commonwealth Bank will charge the 55 days of interest retrospectively on the entire balance, even if minimum repayments are met. What’s more, you won’t get those interest-free days back until those old balances are paid in full. In some cases, such as BankWest, you’re required to pay two consecutive statements in full before they give you this ‘luxury’ back.

In The Prestige, the magician Robert Angier (Hugh Jackman) warns us: “If anybody really believed the things I did on stage, they wouldn’t clap, they’d scream.” I’d be surprised if your next credit card statement was greeted with applause…

Compare credit cards at mozo.com.au

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2016 – A Banking Odyssey

By Yash Murthy 06 January 2010 4:30pmbanking, finance, MozoTag: > >

A story came out this week that seemed 10 years too late – owing to a computer glitch, a sizeable number of Bank of Queensland and BankWest ATM and eftpos machines malfunctioned and stopped working. The reason? An internal clock in the devices ticked over to 2016 instead of 2010, thereby rendering any card with an expiry date earlier than 2016 out of date.

It was always a disappointment to me when the millennium rolled in and nothing happened. Kevin Costner had a large part to play in this, my desire to live in a barren post-apocalyptic wasteland piqued after watching Waterworld. I bought the canned goods and the bottled water. I sacrificed an entire summer’s worth of backyard cricket so I could construct a fallout shelter in the garden. So it was with glee and perhaps the tiniest glimmer of hope that I read about this latest development.

Were there irregularities in the time space continuum in Queensland and Western Australia? Should I be expecting a drive-by visit from a Delorean? More importantly, should I evict the 20 Israeli backpackers from my bomb shelter? They’ve been a real cash cow through the recession.

The whole saga got me thinking about what the world of banking will be like 6 years from now so I’ve constructed a basic timeline of events:

2011 – Gail Kelly becomes a blender jockey at her local Boost Juice after getting the heave-ho from Westpac on the back of a failure to glean a single home loan application in 2010.

2012 – In a bloody coup, the two American marketing gurus in the Commonwealth Bank ads take over the bank and install basketball hoops in branches and hand out money box transformers to kids, actually making going to the bank somewhat enjoyable. This popularity springboards them ahead of the competition and they take over an ailing Westpac, re-branding themselves as ‘Compac’.

2013 - NAB forced by the Australian government, led by a Hologram of the late John Howard, to annex ANZ when a financially crippled New Zealand becomes an Australian state (South Tasmania) and the unifying moniker of National Australia Bank was deemed to suffice for both.

2014 – Compac flourish for a couple of years till they are successfully sued for billions of dollars by American computer manufacturer ‘Compaq’ for copyright infringement. Daily Telegraph headline reports that the outcome has put the ‘Bank back into bankrupt’. Daily Telegraph headline writer fired.

2015 – With ‘Compac’ in dire straits, all their concerns are taken over by NAB. NAB renamed ‘The Bank’.

2016 - Nationwide backlash to what Howard labels a “perceived lack of competition”. Financial markets crippled as investors lose faith in “The Bank” after a 0.25% Reserve Bank increase is met with a 15% rise in the mortgage rate.

Year 0 – Former ANZ upper management turned radical New Zealand nationalists hacked into the software controlling the Howard hologram, and through a series of poorly thought out foreign policy moves, make North Korea unleash three nuclear warheads. Only those of us with fallout shelters remain. We have no oil or water, but luckily I have Gail Kelly with me to make me smoothies, fruit whips and juices. And there isn’t a financial institution in sight.

I guess the apocalypse ain’t so bad after all…

Compare banks with Mozo.com.au

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