Three of the world’s most recognized organizations have come up with banking alternatives for low-income earners. An unlikely partnership between American-Express and Walmart in the US along with the Catholic Church in Tanzania are taking on traditional banking roles to relieve stress felt by low-income earners.
In Tanzania, the Catholic Church has set up the Mkombozi Commercial Bank and Efatha Bank in an attempt to provide financial services to those who are not traditionally seen as ‘fit to borrow.’ The hope is that these institutions will be able to offer an alternative to the exorbitant lending interest rates banks are offering in Tanzania. But what about those who don’t want to loan money or don’t have mortgages? Many low-income earners in the US have experienced difficulty keeping up with their bank fees.
It’s often the accumulated small fees that come with bank membership that can cause a headache. In the US, Am-Ex and Wlamart have launched a fee-free debit card. While the card isn’t an FDIC insured bank account, it’s backed by Am-Ex’s resources. Put simply, it’s a debit card that doesn’t cost anything to keep and gives consumers the ability to use their money electronically.
Australian consumers too are having trouble keeping up with their banks fees and out of cycle interest rates. Current RBA rates are not being passed on by the big 4 banks, and this is causing significant stress to mortgage owners. Would you switch to a non-bank lender run by a religious entity?
Do you like the idea of a fee-free debit card?
If you thought the Carmel was shocked her $32,000 electricity bill, imagine how French woman Solenne San Jose must have felt when she received a phone bill for 11,721,000,000,000,000 euros ($14.92 thousand trillion) ?
Even more alarming was when she was made aware that the amount could not be stopped from being debited from her bank account. Bouygues Telecom put it down to a printing error and subsequent ‘misunderstanding’. A misunderstanding that, had it gone unnoticed (and providing Solenne had the money) would have accrued the Phone company 216 times the world’s GDP. It was probably the first time anyone has been relieved they didn’t have all the money in the world.
So next time you receive a bill (take a seat), and if you think it may be a bit out, spare a thought for Solenne!
After many hundreds of unlistened to demands I’ve given up on telling the big four banks they should do this, that or the other around interest rates.
It hasn’t worked . Each day they delay passing on rate cuts is worth more than $6 million to the big banks. They have a definite incentive for procrastination.
But there must be a better way. First off by dropping our unrealistic expectations complaints will change anything and get more energetic as consumers.
Let’s face it the banks are not going to pass through in full either cuts or increases to the cash rate. They have told us as much in words and actions- many times
In a way they have won not least by turning the debate into the nebulous area of overseas funding costs.
While financial wizards and others bicker about if and how those costs are going up and down the bank creep continues.
The word creep in this sense does not mean a detestable person but to “Move slowly and carefully, esp. in order to avoid being heard or noticed.”
While they were certainly noticed, all the sound and fury signified little apart from a little predictable discomfort for their industry body The Australian Bankers Association.
Depending on how you see it the banks failed to bow to rational persuasion, moral blackmail, human decency or most importantly the threat of losing customers.
We have hardly harkened to the Treasurer’s clarion call to ‘walk down the street’ and find a better deal. The big four still hold what’s been a growing 80% share of the market.
It’s a couple of years since they sought to ‘decouple’, a lovely word that, the amount they charge for their standard variable rates from the RBA’s cash rate.
They have been implored, ranted at and seemingly shamed by the PM, the Treasurer, retailers, consumer groups and public opinion to no avail.
So what’s going to work? Obviously there are no easy answers. Getting rid of exit fees and making it easier to switch banks may help but there’s much further to go.
The banks may be too big for their boots but regulatory change can take years.
In the short term it’s up to us and how and where we put our custom and how far we are prepared to change.
The authorities can help but unless we are prepared to do more than complain the banks will continue sitting pretty.
And with another $6 million a day for not taking an action wouldn’t you?
Tell us ways you think consumers’ actions can help change the situation or do you believe maintaining the rage is enough?
For all the tub-thumping which takes place every time the banks fail to respond fully with changes to the RBA’s cash rate there remains a simple question.
Why don’t the banks fear an exodus of alienated customers seeking solace with more sympathetic and responsive financial institutions?
It’s obvious they know nearly all of us will stay put or at least only wander within the rosy garden tended by the so-called big four.
Perhaps it’s because the alternative lenders such as online banks, credit unions, building societies etc just don’t have enough leverage to seduce us away.
But the fact is many of them actually charge less for mortgages an area where even small differences in the basis points can add up to big money.
Money info site Mozo says its latest survey shows consumers are literally ‘itching to switch’ to other providers.
But as ever with surveys there’s a big gap between what people say they want to do and what they actually get around to achieving.
At the time of writing the NAB and the CBA has passed on some of the cash rate cut. If the others do the same would it be enough to actually make you switch?
If not, and you want to switch, what is it going to take to make you change banks?
Despite the phasing out of exit fees for home loans, and the tick and flick reforms to make it easier to change trading accounts is it still all too hard?
The figures around the rising cost of overseas funding was one such example although even some experts disputed the spin the banks put on them.
But today some refreshingly straightforward numbers have emerged, see here, which tell a version even a mildly financially literate person can understand.
The Economic Record research shows over the past twenty years the banks passed on 116% of each rise to the cash rate but only 84% of each rate cut.
More interesting numbers concern the time lags as to when the banks pass on cuts and rises.
The average for the big four banks is 6.8 days to pass on increases but 10.6 days to pass on decreases at an estimated bonus of $6million+ per day delayed.
The concern here is not so much the banks’ behaviour, which frankly should not surprise us as they have given plenty of notice of their intentions.
It’s about the level of competition which seems sadly lacking in banking when the big four can act with such impunity and no fear of customer backlash.
Indeed reports of new data suggests the switching rates for banks remains sluggish to say the least.
What’s it going to take to shake up the banking market—both the banks and their customers—to get some more competition and more action?
One of the problems, or wonders, of electricity is while you can see what it does in basically making our techno world go around you can’t easily see it.
But starting Friday comes a high-end experiment to bring the movement or flow of electrically charged particles to life, or perhaps even death, in the case of the magician involved.
US magician David Blaine, whose been buried alive and even frozen in an ice cube, is letting a million volts of electricity flow around him for three days non stop in New York. See more here
Don’t try this at home but those who live in Sydney, or Tokyo or Berlin can crank the juice up and down from literally live sites.
Blaine says trips to side show alley in Coney Island sparked his interest in such stunts.
“The endurance angle is one side, but it’s also a kid who had a love for math, science, logic, magic, wonder – that’s my motivation,” he says.
So see what electricity looks like via this video and regain a sense of wonder about this magical phenomenon we all need even if we can’t always afford it.
As you may have noticed One Big Switch are currently campaigning against rising electricity prices. With over 18,000 signatures on our “Tell The Senate: Consumers Want Clarity” Campaign, it is clear Australians want to increase price transparency, as they’re feeling the effects of increasing power bills. Internationally, consumers are feeling the pinch also, however it appears some are taking less traditional approaches to tackling rising electricity costs.
It’s recently been reported that in Tanzania, a luxury pub was caught out having erected it’s own electricity pole, and switching the illegally connected power on at sundown. While this may have seemed like a good idea at the time, the publican responsible won’t be reconnected until he has paid back the power as well as the incurred fines. In India, similar action has been threatened by political aspirant; Arvind Kejriwal.
Kejriwal has threatened he will disconnect the power of Delhi Chief Minister Sheila Dikshit in protest against recent electricity rate rises. Now, while they both seem like interesting ways to beat the rising cost of electricity, we wouldn’t recommend either way.
A far safer and perfectly legal way to have your voice heard is through the current submission to the senate for their inquiry into electricity pricing. Increased price transparency and access to data, can only function to empower the consumer. By pledging your support at www.onebigswitch.com.au you can have your voice heard, and as proved by the success of our recent Big Electricity Switch, people power can make a difference.
What measures would you like to be put into action to benefit the consumer?
Have you heard of any other less traditional ways to reduce the heat of rising electricity costs?