Last week the bosses of Australia’s big banks – CommBank, ANZ, NAB and Westpac – all appeared before the Federal Parliament’s House of Representatives Economics Committee.
There were a great range of questions thrown at each boss, from why credit card rates are so high to their failure to pass on the full RBA rate cuts – yep they were put under major scrutiny.
So now that the hearings are over, what is the next step? Well, rather than establishing a royal commission as pushed by Labor, Prime Minister Malcolm Turnbull has instead decided the Government will establish a banking tribunal.
While the bigwigs get around to greater bank regulations, there’s one thing you can do as a consumer – vote with your feet next time you borrow and look out side the big banks. Here’s why…
1. Challenger brands are consistently more competitive.
When it comes to rates and fees, looking outside the big banks is known to be by far the cheapest option. For instance the average variable rate home loan from the big banks is 4.67% but the best pulled from the Mozo database is just 3.35% from online lender Reduce Home Loans. That rate difference amounts to a saving of $109,617 on a $400k loan and 30 year term.
2. You can borrow from an eco friendly provider.
As discussed previously in our moneyvator series, many of the big banks lend to companies involved in fossil fuels. Whereas challenger brands like Act. and ME Bank have policies of not lending to companies that negatively affect the environment.
3. You’ll become part of a community.
If you do decide to look outside the big banks, you’ll soon discover there are a great range of options from peer to peer lenders, which remove the banks from the borrowing situation and match you directly with investors, to member owned institutions like credit unions and building societies, where profits are passed back to members (i.e you).
4. Customers of smaller lenders are happier.
The large majority of the winners in this years Mozo People’s Choice Awards, were small challenger brands like credit unions and mutuals. These awards are based on the reviews of thousands of everyday Australians, showing you you’ll not only receive competitive products from challenger brands but also a greater overall banking experience.
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