Banks

[am Bays]

With the sales on at the minute I rang my fiancial institution so i can purchase another suit for work so I don't look like a slob. Was hoping to get a $500 increase to take the limit of the card to $3500 didn't want to ga any further than that so the minimum repayments are kept well below $100 a month i.e. managable...

Spoke to a lovely lass on the phone answered the usual questions income expenditure ya da ya da ya da....Congratulations Mr Tassie you can have a limit increase to $20 100 WTF!!!!!!!

Now whilst I like to think I'm "smarter than the average bear" I can imagine the less fortunate of our community being offered half of what I'm offered thinking you beauty $$$$$$, next thing its maxed out and being left with $250 to $500 a months repayments.

Within 3 months they are stuck in debt cycle and appearing on A Current affair as basket case examples of the debt crises affecting Australia.

Damn irresponsible of my financial institution IMO to offer me even half of what they given me. I'll be making a phone call tomorrow to cut that by $!6 600...

As if I'm going to give them potentially $500 a month of my hard earned to make their repayments instead of putting food in my kids mouths...which is what it could come down to if I took up there offer an maxed it out.

[Dutchy]

Was it one of the Big 4 banks Tassie?

Agreed in principle that it should not be done however it is still the choice of the consumer to spend the money, its not the bank that hands over the card in the shops and ATM's...it each persons personal responsibility, if they aint responsible enough then they have to live with the consequences

[am Bays]

Yes and FWIW based on what of know of you mate it wasn't where you work.

Fully agree that banks don't go out and physiclly spend the money but I think there is a degree of social reponsibilty that goes with the limit they give people especially when like most average working australians with a family I have a mortgage, utilities etc to pay in adiition to food and credit card repayments....

The repayments of a $20 000 card in addition to my mortgage and car repayments would = ~ 50% of my after tax monthly income!!!!! not much left for food, phone, power, water and fuel.

I'm thinking of ringing the banking ombudsman on this one.....

[Dutchy]

just had a quick read of our policy and it details that we are only to assess applications based on what the client requests and strictly says not to proactively suggest a further increase

Credit Cards arent under the Consumer Credit Code like normal consumer loans, perhaps they should, as under the CCC banks can be asked to explain why they approved a loan as they are not allowed to approve loans under this code if it is going to put the customer into financial hardship.

[Psyber]

The interest rate on credit card debt is astronomical and they want you to have as much of it as possible! The banks don't like us people who never charge more than they will pay off in full, and keep trying to come up with ways to punish us, but so far the government regulators won't let them.

The Bank behind one of the cards I have keeps suggesting they will re-introduce an annual fee that has been waived for over 10 years, but I simply say, "You can cancel the card then because I have two more that are fee free", and the idea goes away.

If you have chronic card debt I suggest getting a personal loan at cheaper rates, cancel the credit card, and use a debit card or cheque book only.

[Lunchcutter]

sheesh ... just mho but honestly i believe its always best to pay off your cc debt before interest becomes payable z(in some cases i reckon you can get 60 days).. its when you resort to min monthly pymts that they really begin to slug you and its easy to get in the habit of paying min pymt (say 110 bucks or what evera) then put that amt back on in the next month... forever sitting close to maxed out and never getting anywhere with paying it off... personally me and my dh prefer to operate two 1500 ccards and getting most large purchases by using interest free terms (have bought pc, telly, hot water serv, wall furnace this way) that way you pay down a third at purchase and then pay off the balance over the interest free period.. our lcd telly was purchased this way we were offered 48 mnths int free at harvey norman however we chose to pay off in under 12 months next new teev for the poolroom at our new place.. woo hoooo .. just my thoughts... oh yea and remember the banks/financial institutions will keepn sending you granted applications for personal loans, new credit cards etc and seems to me the more you got the more they wanna give ya - guess the message as always is buyer beware!

[Dutchy]

also be wary of interest free periods, while they can be great and work in your favour the retailer includes the interest int he purchase price (you dont get anything for free)....always ask what their "interest free" price is and what their cash price is...youll be amazed at the difference

[Hondo]

Since myself and Mrs Hondo combined banking arrangements we have stopped using her Mastercard and starting getting chunks off her GE CreditLine account

Lo and behold - within 2 months we received a letter from the Mastercard offering a credit increase from $10,000 to $14,500 and same from GE offering another $1,500. All because they could see their cards being paid off and not being used ... so they offer an incentive to spend more! I said the same thing to Mrs Hondo - it would be so easy to get into a real trap.

BTW, if you have equity on your home home loan draw down from that and pay off any credit card debts you have. Better to pay off $5,000 over 30 years at home loan rates than get stuck on the credit card rates. Then set your credit card up for direct debit of full balance by the due date and then you can get all the Reward points and pay no interest.

[Dutchy]

good points Hondo....by making big payments off the cards it also tells them you can afford to do this therefore may have higher spending habits than average, hence the offer to increase

[heater31]

by reading this thread I have made the decision not to own a credit card Always knew that the interest was huge but now they getting irresponsible.

I am looking at getting a new car in the next 3 to 6 months and will need a loan. how should I go about it lads?


Tassie how did you go with them??? give em a rocket.

[Psyber]

by reading this thread I have made the decision not to own a credit card Always knew that the interest was huge but now they getting irresponsible.

I am looking at getting a new car in the next 3 to 6 months and will need a loan. how should I go about it lads?

Tassie how did you go with them??? give em a rocket.

Remember to talk to three or four lending institutions and play them off against each other. It is amazing how fast they'll drop the rate if they know your are checking around. Sometimes car companies subsidise the rates to get the sale, but still get a few quotes. Sometimes the deal is not as good as they say it is.

Watch the details - some of them have penalities if you pay it off early. BankSA/St George often have competitive deals, but last time I checked they don't reduce the interest if you want to pay it off early but expect you to pay it all just as if you were paying it full term, whereas Esanda would give you a pay out figure with interest only up to the new finishing date.

Don't go by the rate they quote as a percentage as it can be deceptive. Check how many months at how much per month and how much if any residual, then add it up yourself. Don't go for big residuals to lower the monthly - you could find the vehicle is worth less than you owe at the end. Sometimes a 4-year term gives you a better deal then a 5-year one, but sometimes it is the opposite - check both options with each company.

Also watch for tricky little extras like contract fees, monthly fees, or termination fees. Usually they are only slipped in by the shonky lenders.

[am Bays]

Tassie how did you go with them??? give em a rocket.

Nah, no point giving the poor call centre girl a serve. What point what that make except to ruin some poor employees day? In a couple of days time I might contact the banking ombudsman

[gadj1976]

My boss tells a story about ANZ in the late 80's or early 90's wanting to grow their business. They went to an American consortium and asked how the easiest way to grow their business.

The American firm asked them, what % of people default and what % of people pay the money back.

ANZ said, 3% default, 97% pay it back. And with that, the consortium said, increase the amount available to all your customers and if only 3% default, you'll make squillions. And they did. And still about 3% default. The 97% are paying back much much more of course, making more and more money for ANZ. As soon as I heard that, I became a shareholder.

[ORDoubleBlues]

also be wary of interest free periods, while they can be great and work in your favour the retailer includes the interest int he purchase price (you dont get anything for free)....always ask what their "interest free" price is and what their cash price is...youll be amazed at the difference

..........and as far as I'm aware (perhaps getting off topic a bit here) if you go out and buy a TV that is lets say $4,000 and you've got it on two years interest free and the two year period ends and you owe $200, you get charged interest on the $4,000 not the $200.

[ORDoubleBlues]

My boss tells a story about ANZ in the late 80's or early 90's wanting to grow their business. They went to an American consortium and asked how the easiest way to grow their business.

The American firm asked them, what % of people default and what % of people pay the money back.

ANZ said, 3% default, 97% pay it back. And with that, the consortium said, increase the amount available to all your customers and if only 3% default, you'll make squillions. And they did. And still about 3% default. The 97% are paying back much much more of course, making more and more money for ANZ. As soon as I heard that, I became a shareholder.

That is an excellent point and that's why banks are lending a fortune for home loans with little deposit or security required because they know if you can't make the repayments, they'll sell you up and still get most, if not all, of the money that's owed back on the loan anyway and what's more, they'll get it sooner - minus the exorbitant interest of course. Governments will tell us that the economy is fantastic but with a much larger slice of household income going to financial institutions than even what was being paid 10 years ago, thats got to be having an effect on many things, particularly small business.

[Dutchy]

also be wary of interest free periods, while they can be great and work in your favour the retailer includes the interest int he purchase price (you dont get anything for free)....always ask what their "interest free" price is and what their cash price is...youll be amazed at the difference

..........and as far as I'm aware (perhaps getting off topic a bit here) if you go out and buy a TV that is lets say $4,000 and you've got it on two years interest free and the two year period ends and you owe $200, you get charged interest on the $4,000 not the $200.

yeah would certainly want to read the fine print on them....the main thing is that TV will probably only cost your $3500- if you pay cash....always ask for the cash price....IF you have the cash you are crazy to use the interest free option

[devilsadvocate]

That is an excellent point and that's why banks are lending a fortune for home loans with little deposit or security required because they know if you can't make the repayments, they'll sell you up and still get most, if not all, of the money that's owed back on the loan anyway and what's more, they'll get it sooner - minus the exorbitant interest of course. Governments will tell us that the economy is fantastic but with a much larger slice of household income going to financial institutions than even what was being paid 10 years ago, thats got to be having an effect on many things, particularly small business.

Good point ODB. There's a lot of worry in the US at the moment about sub-prime lending to people with bad debt history, but if you were the bank, you'd be hoping these people do default because then you get their house, which they've already part paid for and can sell it for a profit to someone else who takes a fat loan they can't afford and the cycle continues....

As for small business, it's harder than ever IMO, so they key is to pump as much cash into the best investments going around over the last few years - the bank shares! If you can't beat them, join them!

Anyone that can be bothered, go to ninemsn finance page and lookup Macquarie Bank's earnings growth (and any bank for that matter) over the last 5 years. DAYLIGHT ROBBERY!

[Dutchy]

DA when banks sell up to get their debt back they dont make any profit, if there is any $ left over once the mortgage is cleared it is returned to the owner....trust me the last thing any bank wants to do is sell up someone, its a long legal process which costs plenty...selling someone up is the absolute last option...

[ORDoubleBlues]

DA when banks sell up to get their debt back they dont make any profit, if there is any $ left over once the mortgage is cleared it is returned to the owner....trust me the last thing any bank wants to do is sell up someone, its a long legal process which costs plenty...selling someone up is the absolute last option...

I could be wrong Dutch but I would have thought that the bank is the owner of the property while the mortgage is being paid.

[Psyber]

DA when banks sell up to get their debt back they dont make any profit, if there is any $ left over once the mortgage is cleared it is returned to the owner....trust me the last thing any bank wants to do is sell up someone, its a long legal process which costs plenty...selling someone up is the absolute last option...

I could be wrong Dutch but I would have thought that the bank is the owner of the property while the mortgage is being paid.

If it sells for less than you owe they still chase you for the balance owing. I think you are entitled to any balance left after they have recovered the debt and costs.