Recently the Westpac Bank announced a net cash profit of nearly $3 billion in its half yearly results. Great for shareholders but is it good for the bank customer.
Whilst the Bank is making huge profits, it has been brought to my attention that the Banks are paying customers minimal interest for the use of their money. Take for example, Stgeorge Bank which is currently offering an interest rate of 0.01% per annum for your money in a freedom account. That means the Bank pays you 0.01%p.a and lends other people money at an interest rate of approx 7.0%+. Its clear why the Banks are making huge profits.
For example, if you had $50,000 in your transaction account and the Bank paid you 0.01% then you would receive $5 for the year in interest. If the Bank lent that same money at 7%, they would get $3,500 per year in interest. Its clear who is making the "big bucks"
Whilst there is available the option to customers of putting their money in a fixed term deposit at a better rate, say 5%, this means that the customers money is tied up for a fixed period and cannot be withdrawn without penalty. Many consumers are just leaving their money in a transaction account to which the Bank has access for a small interest payment of 0.01%.
The cash economy is virtually gone and everybody needs a Bank Account, whether it is to electronically pay bills or an Account in which to receive their salary. Employers do not pay cash to employees anymore. Australians are now forced to have some sort of account. Banks use that money and pay you virtually nothing for it/. Is this robbery? You be the judge.
I guess, on a question of law, the Bank needs to give some sort of consideration to use your money. Thats why they give you 0.01%.
Australians should keep an eye on where their money is and what they are getting in interest for that money.
Comments by Dean Carver
Solicitor
Carver Lawyers - Sydney
