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4 Ways to Save Money and Earn Extra Cash at Your Bank
I often see articles (typically from banks) giving tips on how to save money or how to budget. These articles include tips like “monitor your expenses”, “set savings goals” or “create shopping lists before you shop”. These are obviously good practices for saving money and budgeting, but they often involve you buying a box meal at Aldi instead of ordering a pizza on a Friday night. This stuff you already know and are typically the things you enjoy spending money on. So, how can you save money on the things you hate spending money on? And how can you earn some extra cash at your bank?
Here’s 4 simple ways to save money and/or earn some extra cash at your bank.
#1 Pay Less on Your Home Loan
Go to a loan comparison site (e.g. Finder and RateCity) and take note of the lowest home loan rate available. Then, contact your bank’s customer service line and ask for a payout figure on your loan. Explain that you’re planning to move to another finance company as they’re offering you a better rate. Your bank will immediately put you through to the Retentions Team who will discuss what rate you’re being offered, so they can see if they can compete. The Retentions Team will likely offer you a slightly higher interest rate than what you’re able to get elsewhere as they know there are some costs to you moving banks (let alone the effort and admin). If they offer you a lower rate great! You probably just saved enough money for your next holiday.
Please note, if you currently have a fixed rate home loan it will be harder to negotiate a lower rate on your home loan as there are break costs involved in refinancing these loans.
#2 Avoid Paying Annual Fees on Your Credit Card
Banks can refund the annual fee on your credit card as long as you contact them within 45 – 60 days of it being charged to your account. Steps to take: (1) Ask for the Credit Card Cancellation team; (2) Advise the customer service rep. that you use the card for day-to-day transactions but would like to cancel the card as you don’t wish to pay the annual fee; (3) They should offer to waive the fee. If they don’t offer to waive the fee and you don’t want to cancel the card, simply don’t proceed with the cancellation. Note, if you’re annual fee is greater than $150 you may only be able to negotiate a 50% reduction on your annual fee.
#3 Boost Your Savings by Regularly Opening New Savings Accounts
The banks are always keen to get hold of your savings, as it’s a cheap source of funding for them. Your bank will regularly offer bonus interest on new savings accounts in order to attract new customers. They won’t advise existing customers of these deals but you can also take them up. What’s the catch? The bonus interest is only available for a fixed period (e.g. 4 months), after which it converts to the standard low variable base rate (these days around 1%-2%), so at the end of the fixed “honeymoon” period just open up another account and get back on the bonus interest rate offer!
#4 Avoid Hidden Fees on Loans & Bank Accounts
Firstly, companies are notorious for charging monthly account keeping fees. Most people just ignore these costs as they seem so insignificant at the time, however, these costs add up to a lot over the life of a loan. The average monthly service fee on bank personal loans is $10 (as if they were paying someone to manually handle your account each day!). For a loan term of 7 years this will cost you an extra $840! You know that feeling when money seems to just disappear from your account, and you don’t know how, well this could be one of those reasons.
Secondly, banks have historically enjoyed charging prepayment fees and early exit fees (i.e. they want to charge you extra if you want to pay off your account early!). Borrower’s take note: your circumstances will likely change over the next 7 years. That promotion you’ve been working hard to get from your boss for the last 12 months will happen, and you don’t want to be stuck paying interest on a loan you no longer need once you receive your pay rise. To avoid these costs consider refinancing your loan (home loan or personal loan) to a provider that offers no monthly service fee, no prepayment fees and no early exit fees. This means you will know all your costs upfront, you won’t be locked into a loan you may longer need, or can pay off sooner, and you will find it easier to budget moving forward.