A few months ago, I wrote about how we sold our rental property, in preference for creating a simpler, debt free, financial life. The property sold, and settled and the mullah landed in the bank account. So it was my time for glory! It was my time to happy dance my way to the bank and stick it to them (well that’s how I envisaged it anyhow!).
As it turns out, there were no ‘high fives’, no balloons falling from the ceiling, or champagne bottles whisked from beneath the counter (now wouldn’t that make for a fun banking experience!). No… instead, I spent 45 minutes waiting at my local branch whilst the staff tried to help me with my query: how do I close my home loan?
Now that’s a question that the bank doesn’t like to hear, and judging by the time it took to dig out the answer, it’s a question they don’t get asked very often.
I had the assistant tell me that I shouldn’t close the loan in case I want to redraw from it for purchases down the track. My banking assistants (because it took two people to figure out how to actually close a loan) also suggested I might want to look at investment borrowing and investment options – they would be more than happy to help with that!
You can imagine the response when I mentioned I was going to get rid of our credit card as well and have a VISA debit card instead. “You realise that you would have to use your own money for purchases? Credit cards can be useful for budgeting.” What the?!
Remember – banks make a lot of money from you having a lot of debt. The Commonwealth Bank alone made $9 billion in profit for the 2015-16 year. A large portion of this comes from house loans (though even during last year’s Australian parliamentary enquiry into the banking system, the banks would not provide a breakdown of their profits between product segments, but 60% of the major four bank’s loan portfolios are housing).
And likewise, with credit cards. During the same enquiry hearings, ANZ chief Shayne Elliott admitted credit cards profitability was “well above” most of its other businesses.
This isn’t an exercise in bank bashing! But in that moment, I realised that the businesses I deal with won’t always have the same values and motivation as me.
I will admit, for a brief minute at the bank I did start thinking, hmmm… maybe I should keep the loan open and have a credit card. What if? What if? What if? I got momentarily sucked in by their story. And their motives, which is not for a young family to be debt free. Their motive is to sell debt, credit cards and package fees because that’s what makes banks money!
It took a moment, but I reconnected with MY own story. My story is living debt free, simplifying my finances, feeling gratitude, and using my financial resources to live to my values and my adventures, not the banks! Make sure you stick to yours.
Banks? Love ‘em or hate ‘em? Have they ever tried to flog you a product or encourage you to take on more debt? I’d love to hear your stories!