The smaller players owned by the big banks that offer better deals

Consumers may be missing out on stellar deals by banking with the major banks instead of considering the smaller institutions they own.

Consumers may be dudding themselves of competitive deals by banking with the big four banks ahead of smaller brands they own anyway.

Three of the nation’s big four banks — National Australia Bank, the Commonwealth Bank and Westpac — all own subsidiary brands many Australians bank with but may not realise they are offshoots of the nation’s largest financial institutions.

Analysis by financial comparison website Mozo found in many cases customers can score cheaper deals on products including home loans and credit cards by going with the smaller brands.

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Financial comparison website Mozo spokeswoman Kirsty Lamont said Australians should consider smaller financial institutions owned by the big four.

Examples from their database includes:

• NAB offers a variable home loan rate at 3.35 per cent, compared to their offshoot UBank that offers a cheaper deal at 3.09 per cent.

• The Commonwealth Bank low rate credit card rate is 13.24 per cent compared to their subsidiary institution Bankwest’s Breeze Mastercard with a rate of 12.99 per cent.

• Westpac’s basic home loan rate is 3.58 per cent compared to their subsidiary BankSA at 3.29 per cent.

Mozo’s spokeswoman Kirsty Lamont said customers should understand who they bank with and whether they could get cheaper offers by going with a subsidiary brand.

“Many Australians would be unaware there are now a number of smaller very competitive challenger brands out there that offer low rates and competitive products that are actually owned by the big four banks,” she said.

“In most cases you are going to be paying a premium to bank with the big four banks.

“Eight in 10 Australians still bank with the big four banks and many of us know by doing that we are not necessarily getting the best value products and we are likely to be paying more.”

Sub-brands could offer cheaper deals than the big banks but they might not always leave customers better off, a financial adviser has warned. Picture: AAP

CBA’s subsidiary brand is Bankwest, Westpac’s include Bank of Melbourne, BankSA and St George and NAB’s is UBank.

ANZ does not have subsidiary bank brands in Australia.

UBank’s chief executive officer Lee Hatton said because they don’t have the cost of running bank branches and their mortgage deals aren’t offered within broking channels they could offer cheaper deals.

“Because of those economics we can offer a very different value proposition to our customers,” she said.

“We are not one size fits all, for example we don’t do loans over 80 per cent a loan-to-value ratio so we are not trying to be all things to all people.”

But financial adviser Scott Haywood said the sub-brands could offer cheaper deals but they might not always leave customers better off.

“When you are going with a lower-tier bank they may not have the liquidity and flexibility to pass on full mortgage rate discounts or benefits,” he said.

“From an introduction point of view the second-tier banks will probably offer a sweeter deal than the majors but over a five or 10 year mortgage you may be better off with being with the majors because they will be more consistent with their service.”

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