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“All customers are equal, but some are more equal than others”

6th May, 2019

Readers may recognise this line as a slightly edited version of the proclamation by the pigs who control the government in George Orwell’s novel Animal Farm. In the original line, the word “animals” is used, but the point is the same.

It’s a reference to the hypocrisy of governments that proclaim the equality of all citizens while vesting power in a small elite. In our edited line, the reference is to customers, particularly of banks, who are often graded or identified as worthy of special privileges in the “private banking” section.

This can mean something significant when it comes to interest rates on loans or on savings and term deposits. However, the reality is that banks are always negotiable on interest rates, especially for ADF members, whether or not you’re a “private banking” customer.

That’s because ADF members are people with secure jobs and, generally speaking, have the capacity to repay loans and accumulate savings. Banks, non-bank lenders and deposit taking institutions know this. Such qualities make ADF members very desirable customers.

ADF members should use this to their advantage. They should not be afraid to shop around and even threaten to take their business elsewhere if the deals on offer aren’t good enough. Remember, however, that customers must ask for the best deal, not just assume it will be given. For example, in the current low interest rate environment, the typical interest rate on a term deposit is 2% or less. However, by just asking the question, rates of up to 3% are available. This is worth getting if it’s achievable by asking a simple question (and not taking ‘no’ for an answer).

Similarly, shopping around for the best rates on mortgages, either direct or through a mortgage broker, can bring great financial outcomes. There is no doubt that in the last 12 months lenders have lifted their level of enquiry and investigation before offering loans, but ADF members (as a general rule) are at the top end of desirable customers. By the way, you should not assume that the best rate will be available (even after the Defence subsidy) through the Defence Home Ownership Assistance Scheme (DHOAS). It may be the case, but don’t assume anything. You may be surprised. Request the lender to put the deal in writing to demonstrate its worth against other options.

The key message here is that you are a valuable customer with a great deal of market power. So use it by doing your homework and asking questions. You may get a pleasant surprise which will save you thousands of dollars over the course of your career.

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