Why do people use the big banks?

This might have come up before but I'm curious to know why people still use the big banks? I shifted a loan from NAB to CUA about three years ago and I saved about 1.5% on the rate along with a $300pa "package fee".

When the bank called me to try to keep my business, their only sales pitch was that they have "lots of branches and ATMs". Considering 99% of my banking is done online, I was amazed that they still thought this was an effective sales pitch.

What keeps the rest of Australians with big banks at higher rates?

 

They have more organisation and facilites.

 

I've got 7 mortgages with one of the big banks. The reason that I'm with them is that they offered good rates and they'd lend me money. Those are the two things that are important to me.

And I agree, the $300 annual fee is BS, but if you factor it in across all your mortgages and add it to your gross interest rate, it doesn't make too much of a difference.

 

Sorry, you know what else is out there to compete against, yet you ignore it, hope I don't realise, that I'll stay faithful to you.
It's to late, I've found someone else, if you were more attentive, cared enough about me, our relationship, tried harder, perhaps we wouldn't be breaking up, thankfully we don't have kids, goodbye.

I'd prefer to look after the smaller building societies etc, especially those who support local issues/clubs etc, but like @spludgey said it doesn't always weigh up.

I'd like to see the govs get bank into banking, low cost/overheads, predominantly online, utilise Aussie Post as branches (small fee for under 65), low interest rates for borrowers, high interest options for savers/pensioners, something to compete against the rest of the industry, hopefully stop them adjusting fees/rates when there's no RBA/APRA requirement to, simply for shareholders and CEO performance bonuses.
I often imagine what things would be like if us tax payers still owned CBA today.

 

I heard that the rates of small banks are more volatile. They may jack up the rates quickly when the business risk increases. Also, big banks tend to be more generous in valuation for refinance.

For people who want to build large property portfoli, the amount they can borrow is more important than the rates.

 

CUA actually isn't cheaper than the big banks on most products, you've just got to know what to ask for, what can be negotiated and which lender. It is possible that CUA has offered a bit better than what they normally publish however.

And therein lies the problem. What lenders publish and what can be negotiated are very different. The appetite for different types of lending also changes constantly, so you might be able to get a great deal one day which won't be available the next.

Many of the smaller lenders are a bit cheaper on rates than the Big 4, but they're also more conservative in their lending criteria. You can get access to a lot more money if you're willing to pay a little extra for it. There's not much point in looking at a cheap rate if that lender won't give you the money.

Additionally cheap money often doesn't stay cheap. I've refinanced people away from online lenders that normally offer incredibly cheap rates. The reason for the refinance is to save them money. I can't think of a lender that I haven't refinanced someone away from for this reason. The cheapest rate usually doesn't stay that way, but there are lenders that tend to be consistently competitive and are more willing to renegotiate over time.

All that said, the Big 4 aren't the cheapest either, not even close for investment loans, but the answer probably isn't in the credit unions either.

 

People often open the discussion asking about the cheapest rate because they think that that's the most important thing there is. Here's the order of what's really important:

1. Which lenders will actually give you the money at all.
2. Which lenders or products are going to meet your medium and long term needs, goals and strategies.
3. Which lenders are consistently competitive over the long term.
4. Which lender or product is the cheapest.

Put in this context, cheap loans are one of the lest important criteria.

 

The senior relationship managers at the big 4 (or Macquarie) are typically better at the business support role than smaller banks.

Just my experience.

Banking is not just about the interest rate.

 

I have no idea why they stay with the big 4. A good credit union has competitive rates, less fees (I paid no break costs when switching from P&I to IO because they allowed me to check the calculations with them on a daily basis), friendly staff, easier accessibility, doesn't allow you to purchase beyond your means and backs you when the chips are down.

 

I think some people might have assumed that my OP was a statement - "don't use big banks", when it was actually a genuine question. I get that rate isn't always the most important thing but the general public don't really need anything more than an offset account (and approval in the first place)...

I asked because there is so much fear of the big 5 increasing their rates in response to the new levy so I'm wondering why more people don't consider small lenders as a viable alternative?

 

Horses for courses, the risk appetite of CU's just isn't there if you want to get access to money to make more of it.

 

I would not get the government to run a commerical bank.. they aren't efficient and would waste money hand over fist.... If there's no incentive to innovate, they won't. Governments aren't run to be innovative and cost effective.

 

I wont discriminate, its dependent on criteria, servicing debt etc. wherever/whoever can provide a loan at the time I would use. More about moving forward, I don't worry about fees, who is more expensive etc. just what gets it over the line

 

Habit.

I was peeved at some banks during the recession we had to have.

They were also in process of trying to get everyone hooked/relying on banks.

I moved all my banking to credit unions apart from business, then I did not need them at all in time.

Have not paid account fees or for transactions ever, I do not have to put x in any account either, also every mortgage since has been with smaller lenders mainly. I did go back to one of the majors recently and on settlement they hit me, then they seemed hard to deal with when wanting changes, it reminded me of why I did not like them.

 

The difference here is that credit unions are owned by the members, not by shareholders who must be put first.

 

I have experience that while BS or smaller banks may have a cheaper rate or friendlier service, reads a better smile and a better hi, but if your situation is complicated, or non orthodoxical, then they become conservative. It's ok if you are a typical run of the mill borrower.