On my high horse
If you live in Australia and have done all your life, what I'm about to tell you about the charges levied by Australian banks will seem completely normal.
If you live in the UK, you'll think Australians must be crazy to put up with a system like this. But you have to know that elsewhere it's different before you can kick up a fuss.
In Australia, I have a bank account with Westpac. On the whole, I'm fairly happy with them. They have a system here in Australia, where you pay between $3 and $5 per month as an account 'management' fee. Frankly it's utter bollocks, but $5, I can live with that.
At home, I have a credit card with a debt on it. It's a pain in the ass transferring money to the UK, not least because I get charged a fee by Westpac to send it, and a fee by Barclays to receive it. This is daylight robbery as far as I'm concerned - so I had an idea that I could get a loan out in Australia and transfer the money back to the UK to pay off the card, in effect meaning that I have the debt here instead of back in the UK. It seems like a good idea, no?
OK, so I go online to Westpac and look up taking out a loan.
I just have a quick look around, say I need to borrow $12,000. I don't but it's a good number.
To borrow this money from the bank means I'll get charged a set-up fee. A set-up fee?? Christ, the last time I heard those words was when I was thinking about getting a mortgage. And I could understand it in that case. We're talking hundreds of thousands of pounds, serious cash, and serious risk. The banks need to do work to protect their cash, I get that. $12,000 is the equivalent of £5000. In real terms, a drop in the ocean. A small drop at that and they want to charge a set up fee of $250. Fine OK. Assuming, I could get past that I carry on reading to discover that they have a further charge of $7.50 per month as a 'monthly service fee'. Are they joking? What kind of service are they going to provide to me that could warrant a charge of $7.50 each month??
And keep in mind, that it's not just the $12,000 you're paying, there's the interest as well. Here in Australia, borrowing $12,000 will cost you an interest rate of 12.88%. The base rate is 6.5%. That's a profit of 6.38% on interest alone.
In the UK, borrowing £5000 will cost you an interest rate of 8.7% compared to a base rate of 5.75%, a profit of 2.95%.
So if you break down the cost of a loan in the UK compared to a loan in Australia, £5000 compared to $12,000 which is roughly the same amount of money:
UK - Borrowing from Westpac - Australia's Fourth Largest Bank
Amount you want to borrow: £5000
Amount you'll pay back: £5,526.82
Cost of borrowing overall: £526.82 (roughly equal to $1264.37)
Australia - Borrowing from Bank of Scotland - part of HBOS group, UK's Fourth Largest Bank
Amount you want to borrow: $12,000
Amount you'll pay back: $14,140.80
Cost of borrowing: $2,140.80 (roughly equal to £892.00)
So borrowing this relatively small amount of money in Australia is nearly twice as expensive than borrowing in the UK - for no apaprent reason I can see other than blatent profiteering. Bear in mind you can't borrow unless you're got a current account anyway and add on the extra $5 per month fee and so it goes on and on.
Westpac's profits in 2006 were $3,071 million. Nice work if you can get it.
And if you don't believe me - see for yourself.....
http://www.westpac.com.au/internet/publish.nsf/Content/PBPLCR+Unsecured+personal+loans
http://www.bankofscotlandhalifax.co.uk/loans/smallerloan.asp
If you live in the UK, you'll think Australians must be crazy to put up with a system like this. But you have to know that elsewhere it's different before you can kick up a fuss.
In Australia, I have a bank account with Westpac. On the whole, I'm fairly happy with them. They have a system here in Australia, where you pay between $3 and $5 per month as an account 'management' fee. Frankly it's utter bollocks, but $5, I can live with that.
At home, I have a credit card with a debt on it. It's a pain in the ass transferring money to the UK, not least because I get charged a fee by Westpac to send it, and a fee by Barclays to receive it. This is daylight robbery as far as I'm concerned - so I had an idea that I could get a loan out in Australia and transfer the money back to the UK to pay off the card, in effect meaning that I have the debt here instead of back in the UK. It seems like a good idea, no?
OK, so I go online to Westpac and look up taking out a loan.
I just have a quick look around, say I need to borrow $12,000. I don't but it's a good number.
To borrow this money from the bank means I'll get charged a set-up fee. A set-up fee?? Christ, the last time I heard those words was when I was thinking about getting a mortgage. And I could understand it in that case. We're talking hundreds of thousands of pounds, serious cash, and serious risk. The banks need to do work to protect their cash, I get that. $12,000 is the equivalent of £5000. In real terms, a drop in the ocean. A small drop at that and they want to charge a set up fee of $250. Fine OK. Assuming, I could get past that I carry on reading to discover that they have a further charge of $7.50 per month as a 'monthly service fee'. Are they joking? What kind of service are they going to provide to me that could warrant a charge of $7.50 each month??
And keep in mind, that it's not just the $12,000 you're paying, there's the interest as well. Here in Australia, borrowing $12,000 will cost you an interest rate of 12.88%. The base rate is 6.5%. That's a profit of 6.38% on interest alone.
In the UK, borrowing £5000 will cost you an interest rate of 8.7% compared to a base rate of 5.75%, a profit of 2.95%.
So if you break down the cost of a loan in the UK compared to a loan in Australia, £5000 compared to $12,000 which is roughly the same amount of money:
UK - Borrowing from Westpac - Australia's Fourth Largest Bank
Amount you want to borrow: £5000
Amount you'll pay back: £5,526.82
Cost of borrowing overall: £526.82 (roughly equal to $1264.37)
Australia - Borrowing from Bank of Scotland - part of HBOS group, UK's Fourth Largest Bank
Amount you want to borrow: $12,000
Amount you'll pay back: $14,140.80
Cost of borrowing: $2,140.80 (roughly equal to £892.00)
So borrowing this relatively small amount of money in Australia is nearly twice as expensive than borrowing in the UK - for no apaprent reason I can see other than blatent profiteering. Bear in mind you can't borrow unless you're got a current account anyway and add on the extra $5 per month fee and so it goes on and on.
Westpac's profits in 2006 were $3,071 million. Nice work if you can get it.
And if you don't believe me - see for yourself.....
http://www.westpac.com.au/internet/publish.nsf/Content/PBPLCR+Unsecured+personal+loans
http://www.bankofscotlandhalifax.co.uk/loans/smallerloan.asp
posted by Keyboard Addict at 12:32:00 pm
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