Paul's Insights: Time to flex your money muscle
The beauty of pushing for a better deal is that you could continue to pocket savings year after year. This is especially the case when it comes to your home loan. Mozo found 80% of Australians say they’re dissatisfied with their mortgage provider, but half these home owners never take a close look at their loan and switch to a new mortgage.
Getting better value doesn’t have to mean refinancing. Mozo has found haggling carries a high possibility of success: If you push for a discount, three out of four times you’ll get one.
Requesting a rate discount can be as simple as picking up the phone and talking to your lender. Or ask your mortgage broker to do the negotiating for you. If you don’t score a discount, be prepared to call the bank’s bluff and threaten to leave. With home loan rates as low as 2.29% it can pay to move on.
It’s a similar story with credit cards. Reserve Bank figures show the average rate among ‘standard’ credit cards is a whopping 19.94%. That’s nearly 80 times the cash rate (of 0.25%), the widest the gap has ever been according to Finder. Even among low rate cards, the average rate is 12.93%. But if you shop around, you’ll find some credit unions have card rates below 10%.
Despite the scope to save, Mozo says that across all our financial products, Australians are least prepared to compare and switch their credit card. If you’re staying with a high rate card because of reward points, you could be up for disappointment. Rewards have plummeted recently as card issuers try to protect profit margins.
Be prepared to haggle for discounts on bills like energy and insurance too. For the cost of a few minutes of your time checking out prices online, you could be rewarded with valuable extra cash. It’s a simple way to boost household savings without scrimping on your lifestyle.
Paul Clitheroe is Chairman of InvestSMART, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.
Frequently Asked Questions about this Article…
Reviewing your bills and haggling for better deals can help you save money year after year. Many Australians let cash slip through their fingers by not taking the time to negotiate better rates on major household expenses like home loans and credit cards.
To get a better deal on your home loan, consider haggling with your lender. Mozo research shows that if you push for a discount, you have a high chance of success. You can also ask your mortgage broker to negotiate on your behalf.
If your lender refuses to give you a discount, be prepared to call their bluff and threaten to leave. With competitive home loan rates available, it might be worth switching to a new provider if your current lender won't budge.
Yes, there are better credit card rates available. While the average rate for standard credit cards is 19.94%, some credit unions offer card rates below 10%. Shopping around can help you find a more competitive rate.
Switching your credit card provider can save you money, especially if you're currently paying a high interest rate. Additionally, reward points have decreased in value, so staying with a high-rate card for rewards might not be worth it.
You can save money on your energy and insurance bills by haggling for discounts. Spending a few minutes checking prices online can lead to valuable savings without compromising your lifestyle.
The current gap between standard credit card rates and the cash rate is the widest it has ever been. The average rate for standard credit cards is 19.94%, nearly 80 times the cash rate of 0.25%.
Paul Clitheroe is the Chairman of InvestSMART, Chairman of the Australian Government Financial Literacy Board, and chief commentator for Money Magazine. He provides insights and commentary on financial matters to help improve financial literacy.