Nathan Davies: Don’t bank that you’re on best rate possible

Here’s a crazy idea for banks, power companies, telcos and other businesses that nobody wants to deal with – just make the best deal the default deal, Nathan Davies writes. It might go some way to restoring a little positive karma.

I notice something strange while I was looking at my internet banking the other day – my current interest rate had been removed from the web site.

Normally it’s right there in the top left of the screen, but suddenly it was gone.

Instead it said something along the lines of “your interest rate is the current variable rate minus a discount of 1.15 per cent”.

Which meant … well not much really.

So that lunchtime I popped over to the bank to ask one simple question – what is the interest rate that I’m currently paying on my mortgage.

The teller couldn’t tell me, so she sent me back to the person on the main desk, who also couldn’t tell me. She could, however, book me an appointment with somebody who could.

“I’m keen,” I said, because I’m always keen to talk banking. I mean, who isn’t?

Soon I was seated across the desk from a nice young man in a suit. You know things are serious in the bank when you get to sit down at the desk.

Anyway, our conversation went something like this.

“Hi. Can you tell me my interest rate?”

TAP TAP TAP “It’s the current variable rate, minus 1.15 per cent he replied.”

“OK. Is that the best discount you can offer?”

“No, we could offer you a discount of 1.5 per cent.”

“OK. Can you do that then?”

TAP TAP TAP “It’s done.”

“Um … thanks.”

I was tempted to go a rant about bank loyalty and how we’d held three mortgages with his bank over the years and why on earth would the default not be the best rate that they could offer blah blah blah, but it was too early in the morning for rants so I just went back to work.

Once there, however, I went on an internal, silent rant.

It went something like this: “SO IN THE FOUR YEARS THAT I’VE HAD THIS MORTGAGE YOU HAVEN’T EVEN OFFERED ME THE BEST RATE AND ALL I NEEDED TO DO WAS COME IN AND ASK FOR IT AND I’VE BASICALLY HANDED YOU THOUSANDS OF DOLLARS OF MY HARD-EARNED FOR ABSOLUTELY NO REASON?!”

Of course, internal monologue rants are rarely effective, which is why I’m writing this column.

Hopefully someone in a bank somewhere will read it.

Now, I’ll admit that the only economics classes I took at school involved baking cakes and learning how to sew, but why on earth isn’t the default deal the best deal?

Why do people have to physically ask to be on the best rate available?

And why does it never flow the other way? As soon as rates or charges go up, they’re applied immediately.

You never have to actually go into a branch and say, “Excuse me, good banker, but I believe there was a rate rise recently and it appears that you’ve neglected to apply said rise to my mortgage. Good day.” Has never happened.

I had an almost identical conversation with my power supplier recently.

Turns out that my pay-on-time discount was only half of what it could have been. All I had to do was ring up and ask. There you go sir, our pleasure. Yeah, thanks.

Here’s a crazy idea for banks, power companies, telcos and other assorted businesses that nobody really wants to deal with – just make the best deal the default deal.

That little old lady who’s still paying old rates on her mobile? Upgrade her to the better deal. The family forking out over the odds on their mortgage? Give them a better rate. Don’t wait until they come in and ask. Just do it.

Sure, it might cost a little in lost revenue in the short term, but imagine how much you’d gain in goodwill.

The recent Banking Royal Commission highlighted some absolutely appalling behaviour from our financial institutions – life insurance fees for dead people, shonky advice, high-pressure sales techniques being used on disabled customers.

Making sure everyone’s on the best deal possible might go some way to restoring a little positive karma.

By the way, finance journalist Anthony Keane tells me your mortgage interest rate should have a three at the front. If it doesn’t, go ask your bank why.