THE banks are wooing you again -- and there are some pretty good catches, writes the Barefoot Investor.
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TWO months ago the media was in full bank-bashing mode.
Politicians responded in kind: Wayne Swan moved to ban exit fees; Bob Brown wanted free accounts and freshly baked cupcakes at every branch.
Then on Valentine's Day the NAB launched its highly successful "Break-Up" campaign.
The other three did their part, issuing full-page press ads to combat NAB's social media stunts -- such as fake YouTube break-up videos and paying a pianist to play out the front of rivals' branches.
Their message was clear. The big four, who gouge about $20 billion a year in profits, were suddenly fiercely competing.
"Don't believe us? Here, listen to our break-up CD that we're giving away at railway stations. No regulation needed. Everything is fine."
Uh-huh.
Truth be told, though, some of the banks are offering some pretty good deals at the moment. Yet they also know that only a small percentage of the population will bother to grab them.
But since you've read this far, I'll assume you're a bit of a rate tart. With that in mind, here are my independent reviews of the best deals going around.
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Fee-free banking
THE ING Orange Everyday Account is a good option if you're a bit free and easy with where you stick your plastic.
It has no monthly fees, and no ATM fees, anywhere, so long as you withdraw $200 or more each time.
The big four have some OK transaction accounts. The best of the bunch is NAB's "classic banking" option, which is fee-free (but you'll still be slugged for using non-NAB ATMs).
The other three have so-so deals that (mostly) waive certain fees in return for having your wage deposited. Yawn.
If you want to keep it in the community, most credit unions offer great accounts and good service but as a general rule don't have a large ATM network (unless it's Bendigo Community Bank).
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Best online saver account
CONSUMER group Choice reckons we're giving the major banks a free kick of $7.3 billion by keeping our cash in two-parts-of-bugger-all-interest-paying transaction accounts (while the banks take our money and lend it out at higher rates).
True, but then again the banks have resorted to playing pricing tricks to lure and bamboozle savers.
Take Virgin for example: their online saver account pays 6.51 per cent, but only for the first four months.
After that it reverts back to a standard 5.35 per cent. But they'll offer you a $50 bonus if you have a $1000 savings plan per month. (I think Branson's boys spent a little too long in the war room on this one).
UBank USaver has the market-leading standard rate of 6.01 per cent. If you set up a direct debit of $200 a month, you'll get 6.51 per cent. Stick with that. If they start playing games, move on.
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Best term deposit
WHENEVER someone receives a significant windfall, I almost always advise them to pop it in a term deposit.
This gives them a decent rate of interest and goes some way to protecting them from Uncle Larry and his Iraqi dinar money-making scheme.
Ninety-day term deposit rates are rubbish -- you'd be better off in an online saver. But the longer you're willing to leave it, the (slightly) better rate you're going to get.
Rabobank is paying 6.6 per cent for 12 months, while the Teachers Credit Union is paying 6.57 per cent (with a 2 per cent withdrawal penalty).
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Best credit card deal
SINCE the financial crisis, Aussie households have been increasingly paying their credit cards in full each month.
In that regard people are using their cards as a convenient payment method rather than an expensive way to fund a new telly.
The Bankwest Zero MasterCard is the best of a bad bunch. It has no annual fee, a 16.99 per cent interest rate (that you should never, ever pay), 55 days interest-free, and a rewards program (which you'll probably never get anything back from).
In the past I've advocated playing credit card roulette -- transferring your debt to a zero per cent balance transfer deal and then paying it off.
Yet experience has shown me that some people get sucked into spending on the new card (which is why the banks offer teaser rates in the first place).
A better idea is to ring your bank's hardship department and explain your predicament. Maybe you'll get a lower rate, or a temporary freeze on your repayments. I've seen both happen.
Then do whatever you can, as quick as you can, to domino your debts.
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Competitive home loans
DESPITE what Wayne Swan says, navigating the mortgage maze is tougher than you'd think.
That's why whenever I find myself looking for a loan I pay an independent mortgage researcher to work on my behalf. So I had researcher Michael Lee, of Keyfacts, hunt down the best deals on the market.
For a variable loan, the AMP Bank home loan came up trumps. It has an interest rate of 7.02 per cent, set-up and establishment fees of $545 and no ongoing fees.
Importantly, it has a 100 per cent transactional offset account, unlimited extra repayments, and fee-free redraw. The downside is they'll slug you $1000 if you leave within the first four years.
UBank's UHomeLoan was another contender. Its current rate of 6.99 per cent is one of the best on the market -- and even better because it has no application fee, no ongoing fees and no exit fees. The reason it wasn't our top pick is because it's available only for people who are refinancing and have at least 20 per cent equity, and there's also no offset account.
The best three-year fixed interest home loan was from CUA, which has a rate of 7.19 per cent, unlimited extra repayments, fee-free redraw, and an offset account.
The Commonwealth Bank's Wealth Mortgage Advantage had a slightly higher rate of 7.24 per cent, but comes with the option of locking in your rate from the time you apply (which is good if rates change in between signing contracts), which most banks don't offer.
The thing to remember about home loans is that there are a number of variables that will determine your end offer: the amount of equity you have, your credit history and the location of the property.
That's why it's important to shop around -- or pay a researcher to do it for you.
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Good value pet insurance
MY golden retriever, Buffett, is recovering well from his tiger snake taste-testing. During the week the vet rang and gave him the final all-clear. (I told her we'd had a minute's silence to commemorate the $6000 that had left my bank account.)
I've now taken out Medibank Private's Silver Paw Cover, which has an annual premium of about $250 (with a $500 excess), and an annual benefit limit of $12,000. As with all insurers and mothers-in-law, conditions apply.
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Online share broker
FIGURES out last month from Morningstar show the average fund manager underperformed the market in 2010. Worse, they hit investors with high fees for the privilege.
That's why sidestepping the financial funds food chain and investing directly is such a good idea.
Bell Direct is consistently one of the cheapest online brokers. They'll let you buy and sell shares online for $15 a trade, or 0.1 per cent for trades over $1000. (If you feel the need to speak to someone over the phone, call your grand-daughter and get her to do it online for you.)
Banks and other financial services companies have learned a thing or two from supermarket marketing; most have a great value, loss-leading product as a way to get punters in the door. Smart Barefooters can cherry-pick these deals and save a fortune.
In retrospect, all the NAB marketing campaign did was really confirm what we'd always suspected: the banks really are in bed together. And all a slick social marketing campaign did was reinforce that fact.
So maybe you should listen to NAB and break up with the financial leeches in your life. I've done all the leg work, now repeat after me . . . "it's not me, it's you".
Tread your own path!
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BAREFOOT'S BEST:
TOP TRANSACTION ACCOUNT
ING Orange Everyday Account
No account fees and no ATM fees anywhere as long as you withdraw $200.
BEST ONLINE SAVINGS ACCOUNT
Ubank USaver
6.01 per cent or 6.51 per cent with a monthly direct debit of $200.
BEST NO-FRILLS CREDIT CARD
Bankwest Zero MasterCard
No annual fee, 16.99 per cent interest rate with 55 days interest-free.
TOP HOME LOAN PACKAGES
Variable - AMP Bank Home Loan
7.02 per cent interest rate with $545 in set-up fees but no ongoing fee. Includes an offset account, fee-free redraw and unlimited extra repayments.
Fixed (three years) - CUA Home Loan
7.19 per cent rate with fee-free redraw, unlimited extra repayments and an offset account.
PET INSURANCE DEALS
Medibank Private Silver Paw Cover
$250 annual premium with $500 excess. Covers injury and illness (check policy).
BEST ONLINE BROKER ACCOUNT
Bell Direct
$15 per trade, or 0.1 per cent for trades in excess of $1000.
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