Dealing with rising interest rates

by Chris Lang on November 4, 2010

Rising Interest RatesThe RBA decision to lift interest rates by 25 basis points from 4.50 to 4.75 didn’t come as a surprise – in fact many of us thought it was only a matter of time. But when the Commonwealth Bank decided to lift the home loan rates by 45 basis points, now THAT was a nasty surprise and it caused all sorts of reactions. No wonder people are angry; I sure would be if I was to lose another $100 a month for no good reason but greed of the big bad bank.

But as the saying goes, “Don’t get mad – get even”. Under most circumstances I am a sort of forgive-and-forget person, however … in this case I am in favor of getting even.

How? Switch to another product (loan) possibly of another bank, or, if that drastic measure frightens you, negotiate a better deal with your current bank on your current loan.

Choice Banking Satisfaction Survey 2010 shows that although the Big Four banks ranked bottom for customer satisfaction, they are quite open to giving discounted rates – when asked, of course.

Among other things they found out that

  • Commonwealth (CBA) rated best for negotiating with its customers for home loans (just ahead of NAB) and Westpac for transaction accounts.
  • ANZ and Westpac were most likely to give their customers an interest rate reduction on their home loan.
  • ING Direct proved reluctant to negotiate, but claims this is because its rates are already competitive. Members ranked ING second-best for home loan satisfaction, so it rings true.
  • Transaction account customers who sought a better deal were usually offered a better product.

How do you negotiate with a bank? Simple. Do your homework first and find a competitive product, and then give them a ring or make an appointment and pay a visit to your branch. Don’t be afraid to say that you’re not happy with your current product and ask for a better one – it may pay off big time.

Have you tried negotiating a better deal with your bank? Leave a comment, tell your story.

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