Finance

Rising interest rates – should you change banks?

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Treasurer Wayne Swan has responded to the announcement that St George Bank and Westpac will raise their interest rates because of increased credit costs by launching an investigation into barriers preventing home-loan borrowers switching banks.

Exit fees, which many lenders are reportedly relying on to support profit margins, are likely to be under the spotlight in the Treasury review.

Suncorp is the next lender expected to join ANZ, NAB, Commonwealth Bank, St George Bank and Westpac and raise its home loan interest rate.

As a Reserve Bank of Australia interest rate rise in February is looking more likely as inflation pressure grows should you change banks?

Should you move all business to the new bank offering attractive pricing? If you are seriously contemplating an offer of better pricing from another bank, consider the following factors before changing banks:

  • Is the new bank willing to sign an agreement on the pricing for three years?
  • Will your company incur additional costs as a result of switching banks? For example, costs in notifying customers and suppliers, changing deposit and cheque books.
  • Is the new bank’s service level good? You may be able to find out by talking to some of its customers. You may have customers or suppliers who have an account with the new bank.
  • Will the account manager allow you to meet his or her direct boss and the credit officer handling the account? These people are usually the decision makers on your account and meeting them to discuss your banking solutions will enhance their understanding of your business needs. If you are not allowed to meet with these people, the bank is giving you a message that you are not an important customer.

For more details see our story: How to get a better deal from your bank.

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