(03) 9020 2905Debt Man column – The West Australian (Money)
For: January 25, 2010.
Bruce Brammall
Debt Man
It’s rare that a life opportunity comes without choice. And life without choice would be like … living in Cuba, in the bad old days, when the whole world was black and white.
Some people’s lack of choice is of their own making, like Richie Benaud and his choice of suits to wear in to Channel Nine (the cream, the white, the off-white, the ivory or the beige).
Without options, would you bother with restaurants?
“Welcome sir. Minestrone?” a surly waiter asks.
After several moments’ silence, you reply quizzically, “Or …?”
“Or …”, stammers the waiter, “… no soup for you!”. Soup nazi.
Only in Vietnam have I come across a menu with just the two items – “noodle soup chicken” and “noodle soup beep”. (Oh, I lie. There was a third item – 333 beer.)
I ordered the beep, half-hoping I’d get char-grilled Road Runner on top of my egg noodle broth and be able to chalk one up for the Coyote. It was somewhat reassuring that what came out was, far more plausibly, dead cow.
Last month, Gail Kelly had a choice. Option one was for Westpac to match the Reserve Bank’s 25 basis point increase in the official cash rate.
Option two was to put them up by 45 basis points. And, in doing so, both paint a target on her chest and place a magnet there to really centre the arrow tips.
And there were 1000 choices in between. For example, did Westpac need to come out screaming with its announcement just hours after the RBA moved? Or could it have “considered” its position and announce it a few days later?
When the RBA goes again, possibly next week, Gail has a chance at redemption. So, will she match the RBA if her competitors do, thereby remaining uncompetitive? Or will she succumb to pressure to pass on less than the RBA to narrow the gap with competitors and win back some goodwill?
Westpac is haemmorrhaging. They are financial lepers. Nobody wants to touch them – not their staff, not their customers. Unless it’s with a baseball bat.
From a public relations perspective, Westpac needs to pull something special out of its hat. And it will have to be sexier than Farrah Fawcett (RIP Farrah) in Charlie’s Angels.
From all reports, Westpac can’t buy new customers now. So here’s your choice, if you’re currently with Westpac.
If I was a Westpac customer – I’m not, and I’ve got beeps with my own bank – I’d be asking Westpac how much it valued my business right now.
“Mr Westpac Manager, a competitor has offered to beat your rate 20 basis points below on my $400,000 loan? That’s $800 a year of savings.
“I’d be crazy to stick with Westpac, wouldn’t I? However, if Westpac was prepared to increase my current discount, perhaps I could be persuaded to stay.”
They wouldn’t even need to match the rate. Just an increase in your discount from 0.6 to 0.7 per cent, or the introduction of a discount at all, would probably be enough.
Because as sure as regret follows greed, Westpac will have to seek the forgiveness of its customers. And if you’ve locked yourself into a better deal, you may well end up laughing when this is all over.
You’ve got nothing to lose. If Westpac doesn’t accept the invitation to your party, you can invite the other bank.
The days of banks moving in unison, up and down, died when the GFC crashed the party. There could be good opportunities like this coming up as interest rates continue to rise through this year.
And has anyone looked at cash savings rates lately? There’s a war on for your spare coin. Banks are fighting tooth and nail to get their hands on your money. And there are some great deals available if you’ve got some rainy day moolah that you don’t have a better use for at the moment.
According to infochoice.com.au, $10,000 in spare cash can earn you as much as 5.61 per cent at the moment. Ubank (owned by NAB), BankWest (CBA) and ANZ are offering interest rates above 5 per cent. Most people are only paying 6 per cent on their mortgage
Surprisingly, no Westpac near the top of that list. Time to do something about your beep with Westpac.
Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and a licensed financial adviser. bruce@debtman.com.au .