the mozo blog

State against State. Mate against Mate. It’s a line that epitomises rugby league’s annual showcase of interstate rivalry, underscoring the passion and pride on display between the NSW cockroaches and the cane toads from Queensland. With rugby league’s annual State of Origin series now decided, it’s time to bring back the financial biff and pit the states head on!

Since Origin is about representing your state, community and people, we’ve decided to use what consumers have said about their banks hailing from each particular state to create an overall picture. So using the 30,000 bank reviews you’ve submitted, it’s time for Mozo’s annual ‘Rate of Origin’. State against state. Rate against rate.

With 7371 reviews behind them and big players like Westpac, Macquarie and St. George as well as no less than 4 credit unions on our list of the top 10 Australian banks in the side, NSW comes in as strong favourites. As always, Queensland are the underdogs, conceding a significant numerical advantage in both number of reviews (2416) and number of providers (10 to NSW’s 15). They’re led by Queensland stalwarts like Suncorp, Bank of Queensland and their sole representative in our top 10, CUA.

With the NSW camp already shattered and in turmoil after losing their fifth straight origin series, it will come as another body blow to the state and their footballers that NSW is getting dusted not only on the field but also in their wallets. NSW banks put up a solid if unspectacular average overall rating of 6.91, led by strong performances by Teachers Credit Union and the Greater Building Society. However, with old hands Suncorp and Bank of Queensland ably steering them round the park and strong efforts from CUA and Heritage Building Society, the banana benders have stormed home with an overall rating of 7.34 to claim the Origin title.

The real difference between the sides was the abject performance of Westpac, whose rating of 6.7 was the catalyst to NSW’s demise. If you remove Westpac from the equation, NSW’s rating rises to 7.25, a mere drop goal away from victory. NSW will be looking for Westpac to pick up their game over the next year to avoid the pain and humiliation of another Rate of Origin defeat.

So as the dust settles and the xxxx’s are cracked in bank head offices around Brisbane and wider Queensland after another fiery clash between these two interstate rivals, I implore all Origin fans out there to get behind your state and rate your bank to give your state a shot at Origin glory next year!

After much debate and conjecture, the Federal government finally issued what has been widely labeled as a cautious and narrow response relative to the broad and expansive scope of the Henry Review of the taxation system. Indeed, only a smattering of the 138 recommendations outlined in the review have been taken on board for this round of reform. Left off the list were the anticipated new tax concessions on savings. Attention instead turned squarely towards superannuation with Australia’s aging population looming as a big issue.

While a lot of the focus will be on the exclusions, there were some significant steps made towards reform yesterday, the three cornerstones being:
* A 40% tax on mining industry profits, labeled as a resource rent tax on their “super profits” and netting the government $12 billion in forecast revenue between 2012-13.
* Increasing the superannuation guarantee from 9% to 12% by 2020 with the government to contribute $500 for people earning up to $37000.
* A cut in the company tax rate from 30% to 28% by 2015. Small businesses will get the cut by 2013 as well as receiving a range of other new benefits.

The changes announced yesterday have been earmarked as the first step in a wave of changes in enacting revolutionary tax reform. The government has explicitly stated that there will be more announcements in the future on savings incentives, as one of central issues to be addressed in the government’s second term agenda. This still leaves both financial institutions and consumers in the lurch for the foreseeable future however. Many hoped that by increasing bank-held deposits, the saving concessions would help reduce funding costs by alleviating the need to rely so heavily on foreign debt, thereby reducing the need for banks to enact mortgage rate rises above that of the Reserve Bank.

So all up it’s much the same for most of the players in the banking sector, at least for now anyway. All eyes now turn to Martin Place tomorrow, as we see what effect these changes (or lack thereof), will have on the Reserve Bank’s monthly cash rate announcement. Mozo’s rate chasers will be out in force, so be sure to check our Reserve Bank interest rates page from 2:30pm tomorrow to get all the latest news and rate changes as they happen.

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As you may remember, a media firestorm erupted last week when Westpac announced it would charge interest on fees and interest on all Westpac Credit Cards. Westpac defended itself by saying this is standard practice among banks — but just how standard is it?

Well, it seems Westpac was right. Across the ‘Big 4′, interest is charged on interest and fees. And they’re not the only ones either, with the likes of American Express, Citibank and St George all guilty of the same tactics.

But this isn’t all — while digging into the fine print about interest and fees, I discovered a myriad of sneaky tricks banks use in charging customers. Forget the trivial feats of magicians and illusionists like Blaine, Copperfield or Criss Angel; for real trickery you need look no further than your monthly credit card statement.

For example, a widespread ace you’ll find up providers’ sleeves involves the specific debts your repayments actually pay off. Most cards’ conditions require your repayments to go towards those purchases that attract the lowest rate. This makes any purchases made at a higher rate more likely to attract interest charges, as they are the last to be paid off.

Another little rabbit in the hat is the date from which interest is charged. Instead of charging interest from the date a transaction is posted to your statement, some providers charge from the date of transaction. While there’s only a few days’ difference, it can add up, especially for larger purchases.

And then there’s the cleverest banking sleight of hand — the ‘prestige’ in magician’s parlance. The typical 44-55 days interest-free period on purchases is often viewed by customers as a breather between spending and interest charges. But quite often this buffer pulls a disappearing act. If your balance is not paid in full by the due date, you’ll lose your interest free days with Commonwealth, ANZ and Westpac. NAB is more lenient, but you still have to maintain your monthly minimum repayment.

So what does this mean for your bottom line? If you lose your interest free days, your bank will levy interest comprising a total of daily interest charges on your purchases going all the way back to the date of purchase. While NAB and ANZ only charge this interest on the overdue amount, Westpac and Commonwealth Bank will charge the 55 days of interest retrospectively on the entire balance, even if minimum repayments are met. What’s more, you won’t get those interest-free days back until those old balances are paid in full. In some cases, such as BankWest, you’re required to pay two consecutive statements in full before they give you this ‘luxury’ back.

In The Prestige, the magician Robert Angier (Hugh Jackman) warns us: “If anybody really believed the things I did on stage, they wouldn’t clap, they’d scream.” I’d be surprised if your next credit card statement was greeted with applause…

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A story came out this week that seemed 10 years too late – owing to a computer glitch, a sizeable number of Bank of Queensland and BankWest ATM and eftpos machines malfunctioned and stopped working. The reason? An internal clock in the devices ticked over to 2016 instead of 2010, thereby rendering any card with an expiry date earlier than 2016 out of date.

It was always a disappointment to me when the millennium rolled in and nothing happened. Kevin Costner had a large part to play in this, my desire to live in a barren post-apocalyptic wasteland piqued after watching Waterworld. I bought the canned goods and the bottled water. I sacrificed an entire summer’s worth of backyard cricket so I could construct a fallout shelter in the garden. So it was with glee and perhaps the tiniest glimmer of hope that I read about this latest development.

Were there irregularities in the time space continuum in Queensland and Western Australia? Should I be expecting a drive-by visit from a Delorean? More importantly, should I evict the 20 Israeli backpackers from my bomb shelter? They’ve been a real cash cow through the recession.

The whole saga got me thinking about what the world of banking will be like 6 years from now so I’ve constructed a basic timeline of events:

2011 – Gail Kelly becomes a blender jockey at her local Boost Juice after getting the heave-ho from Westpac on the back of a failure to glean a single home loan application in 2010.

2012 – In a bloody coup, the two American marketing gurus in the Commonwealth Bank ads take over the bank and install basketball hoops in branches and hand out money box transformers to kids, actually making going to the bank somewhat enjoyable. This popularity springboards them ahead of the competition and they take over an ailing Westpac, re-branding themselves as ‘Compac’.

2013 - NAB forced by the Australian government, led by a Hologram of the late John Howard, to annex ANZ when a financially crippled New Zealand becomes an Australian state (South Tasmania) and the unifying moniker of National Australia Bank was deemed to suffice for both.

2014 – Compac flourish for a couple of years till they are successfully sued for billions of dollars by American computer manufacturer ‘Compaq’ for copyright infringement. Daily Telegraph headline reports that the outcome has put the ‘Bank back into bankrupt’. Daily Telegraph headline writer fired.

2015 – With ‘Compac’ in dire straits, all their concerns are taken over by NAB. NAB renamed ‘The Bank’.

2016 - Nationwide backlash to what Howard labels a “perceived lack of competition”. Financial markets crippled as investors lose faith in “The Bank” after a 0.25% Reserve Bank increase is met with a 15% rise in the mortgage rate.

Year 0 – Former ANZ upper management turned radical New Zealand nationalists hacked into the software controlling the Howard hologram, and through a series of poorly thought out foreign policy moves, make North Korea unleash three nuclear warheads. Only those of us with fallout shelters remain. We have no oil or water, but luckily I have Gail Kelly with me to make me smoothies, fruit whips and juices. And there isn’t a financial institution in sight.

I guess the apocalypse ain’t so bad after all…

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