Smart Banking Tips

Good deals out there.

Credit card providers, every-day e-accounts and even home loans are increasingly offering discount deals and cash-back offers to win customers.

As Effie Zahos reports in the March issue of Money magazine, perhaps the most ground-breaking product in recent times is the salary transaction home loan. It works on the principle that interest is calculated daily, so the more you throw in on day one, the more you can save.

It's linked to a credit card. Borrowers are encouraged to deposit all of their salary into the loan, live off their credit card during the interest-free period and withdraw living expenses once a month.

If followed correctly, at 7% a homeowner with a $160,000 25-year mortgage who has a monthly salary of $3100 and spends around $2000 a month can expect to save one year and three months off their term and over $14,000 in interest payments.

Tiered interest rates

Another favourite boost for your financial bottom line can be found in credit cards that offer tiered interest rates. This can be handy if you know you are going to need more then, say, 55 days to pay off a large purchase.

The Commonwealth Bank, for instance, allows some purchases over $1000 to be paid off at a heavily discounted rate of just 0.99%. The rate applies for three months and there's no interest-free period during that time. Then it's back to the regular interest rate of 15% to 17.65%.

Citibank has a credit card that matches interest rates to spending.

Cash-back credit cards

There's only one so far — National Bank's Visa Mini card — but more are sure to follow if the US example is anything to go by. With National, if you spend $1000 a month on your card, you receive $120 cash back each year. You must repay your charges in full each month. If you apply before May 31, the annual fee of $19 will be waived.

Trendy card users may like the fact that the card, nearly half the size of a standard credit card, comes in five different colours, has a phone hook and a cover.

Cash-back home loans

Non-conforming lender Pepper Homeloans recently launched what's probably the only home loan that hands you cash in return for your loyalty. Other lenders offer discounts or rewards but Pepper is the only one that will actually pay you for banking with them.

Every three years and subject to satisfactory payment history, you get a cash-back of one percent of the outstanding loan balance. The rebate is credited to your savings account, not the home loan.

With all these deals, you need to check all the rules and potential costs before you decide they're for you.

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