Claim those bonus bucks

You can redirect a percentage of the commissions you pay on financial products to yourself.

You can redirect a percentage of the commissions you pay on financial products to yourself.

AUSSIES are battening down the hatches like never before. We're paying down our internationally high levels of household debt and, fearful that that metaphorical rainy day is drawing nearer, saving the biggest percentage of household income - into double digits - than we have for two decades (apart from a brief period during Credit Crunch I).

All of this requires cash. And to generate extra when the cost of necessities is increasing by even more than official inflation figures suggest, means cutting back on the luxuries.

But it doesn't have to be that painful. As I write often in this column, your so-called fixed costs will be anything but. Getting a better deal on everything from your mobile to your mortgage will see you save instantly.

And what if I told you there is a way just about every reader can get perhaps $1000 in cash courtesy of their financial products, starting immediately?

Hidden or trailing commissions leach out of everything from insurance and mortgages to superannuation and managed funds.

On super and managed funds they are often 0.4 per cent a year. So if you have a $50,000 fund, that's an annual $2000 - and it grows with your balance. This is money that usually comes directly off your bottom line.

And there is big money to be clawed back in insurance, too, as ongoing commissions can be as high as 35 per cent of your annual premium. So if you pay $2000 in life and income protection insurance, this could be generating $700 in trail.

Your mortgage will attract such a commission only if you purchased it through a mortgage broker. This will be 0.2 per cent of the loan amount, which might sound insignificant - but because loans are so big, will be significant indeed. On a $400,000 loan, it will be $800.

All this money is supposed to pay for ongoing service but most people get none. Think about it: are you still in contact with any adviser or broker who recommended you a product years ago?

And it may stun you to realise that even if you bought the product direct from the provider, with no advice or third-party help, it may have a commission built into the pricing that is either being paid to someone unknown to you or simply sucked up as additional profit for the provider.

Thankfully, a whole industry has sprung up to allow you to redirect this money to yourself. A dozen or more commission rebate services allow you to stake claim to a portion of the trailing commission you generate. These services cover different products and rebate different amounts at different intervals.

As examples, Commission Refunders covers everything but general insurance and home loans, and rebates 50 per cent of the first $198 commission, then 100 per cent thereafter, biannually. covers all products mentioned but keeps half of the first $295 and gives it to you after that, annually.

The best service for you will depend on the products you hold. But you're talking big bonus money here. The services cite an annual average of between $208 and $1000 a year. I do this myself and get up to $200 a month back - mainly from the basic life insurance I have to cover my family.

And while you may have heard that commissions will be banned from July 1 next year, it's only on new products - so you need to act to reclaim what's yours on existing ones. And the ban won't extend to insurance held outside super or to mortgages.

Of course, everyone deserves to be paid for the work they do. So if you get great, ongoing service from someone who previously sold you a product, then their commission is totally justified. If not, though, extra money helps a great deal in the bid to pay down debt and build a savings buffer.

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