For those in Perth always looking for a better, faster, cheaper way

Tuesday, April 20, 2010

Inertia your Greatest Enemy with Banks

Banks and credit card companies love one thing about consumers... Inertia.

They get you in with an introductory rate or bonus and before you know it, you are earning the lowest interest or paying the most amount in credit card fees. When Term Deposits expire, banks send you a letter telling you that it has expired and if you do not do anything about it, they will reinvest your money... but don't stop reading there!

Banks - Term Deposits
The rate that they reinvest your money is probably not the same rate as you invested with them in the first place. We had a term deposit expire with CBA and if we did not do anything, they would invest the money again for a rate almost half of what we were getting with the first term deposit. To avoid getting ripped off, the letter said that we need to go to the bank to choose a different rate / terms. Just by doing this, we reinvested for about 6% for six more months as opposed to what they offered initially of 3.75% for five months. Intertia, they will love you for it.

We'll talk about Bank introductory specials in the next post

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