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Andrew Willink
Finance Expert
+ About Andrew Willink

About Andrew Willink

Andrew Willink is the Founder and Executive Chairman of RateCity.

Born in Holland, Andrew moved to England to study at Greshams School in Norfolk at the age of 13. Following school, Andrew began his banking career in London, as a foreign exchange trader with the National Australia Bank (NAB) in 1974.
Four years later, Andrew was transferred to Australia and spent a couple of years in NAB’s Sydney and Melbourne Head Office. Instead of returning to the UK, Andrew started new treasury divisions for Bankers Trust (BT) Australia – Sydney, Barclays – Sydney and Hong Kong, and then moved on to become Director of Toronto Dominion Australia.
With his extensive experience in senior leadership positions in the international banking sectors from working in Amsterdam, Hong Kong, London, Melbourne, Sydney and Toronto, Andrew transformed Australia’s retail finance industry in the 1990s. He was the first to establish a mechanism for financial institutions and consumers alike to compare more than 17,000 products in Australia’s retail marketplace.
From this simple and innovative concept, Andrew pioneered the development of CANNEX (now called CANNEX CANSTAR) as Australia’s leading independent and most respected retail finance data, ratings and research firm.
In 2006, Andrew set up a unique research, comparison and purchase website of most financial products – RateCity.com.au – using data provided by CANNEX CANSTAR. Andrew then initiated a joint venture agreement with ninemsn to capture Australia’s largest online audience of eight million people each month.
He is recognised as a leading spokesperson for the retail financial industry, actively participating as a full member of the Finance and Treasury Association for more than 20 years and regularly appearing on television, radio and in the press.
Andrew continues to combine his vast experience in banking and strong relationships to innovate Australia’s finance sector.

‘Tap and go’ to the rescue!

Wednesday, October 27, 2010

Many people dread going to the shops for fear of having to line up for what feels like forever only to purchase a few items. But new credit card technology known as ‘tap and go’ is expected to reduce these queues and purchasing time, by allowing consumers to pay for transactions of $100 or less without the need for verification by signature or PIN.

Customers just need to swipe their Visa (payWave) or MasterCard (PayPass) credit card or debit card within 4cm of the scanners which read the microchip embedded in the card and processes your transaction in seconds.

Contactless payment systems have been used in Europe and North America for years. There are more than 50 million MasterCard PayPass card users across the world and 141,000 merchants with the systems installed according to the Commonwealth Bank.

But while this system is new to Australia, the question on a lot of people’s minds is whether it is safe, especially considering credit card fraud is a major problem.

Because the card is swiped, technically there is no reason for it to leave your hand so the risk of leaving it behind is reduced. You are also more protected from skimming devices that have the ability to read magnetic stripes because you avoid these devices altogether.

Other security measures have also been implemented to assist shoppers from losing their funds. For instance, if you scan an item more than once, most financial institutions say you won’t be charged double. And if any unauthorised transactions appear on your statement that you didn’t make you should be able to get your money back by notifying your provider.

There are also safety measures that you can practice to keep your card and your information safe. For instance, keep track of all of your purchases by looking at your statements and your balance and if you see any unauthorised transactions or your card is lost or stolen, contact your financial institution immediately so they can stop your card and avoid any transactions being made. Another important thing to do is to always be aware of where your card is and keep it in a safe place.

Some people may not realise that their credit or debit cards may have the chip implanted and can start avoiding queues at participating retail outlets. If you are not sure, speak to your financial institution, otherwise you can apply by comparing credit cards and transaction accounts online at RateCity.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Grow your investment with interest in advance

Thursday, September 16, 2010

If you’re a budding property investor or if you’re keen to tap into the property investment market and buy a property soon, there’s a way to take advantage of tax incentives and help you budget the year ahead.

It’s called ‘interest in advance’ and it’s a home loan feature that allows you to pay for the interest you will incur for the year as an upfront lump sum. The best part about interest in advance loans is that you don’t have to wait for the next financial year to claim the interest you paid as a tax deduction because you pay it upfront in the current financial.

Aimed at property investors to maximise their tax benefits, interest in advance loans can also be helpful with budgeting and cash flow, in case you don’t earn as much as planned in the following financial year.

The majority of interest in advance home loans are fixed, which makes it easier for lenders to determine your projected interest costs, but it is possible to find a variable rate as an annual amount. Interest in advance is only available for a certain number of years – usually no longer than seven – and you may be able to choose the frequency you wish to pay the interest upfront such as monthly, quarterly or yearly.

Repayments on the principal are usually deferred until the interest in advance term is complete. And, like any loan, you can usually make additional repayments but make sure you check if a penalty fee is involved.

Another benefit is some lenders offer discounts for paying your interest upfront. RAMS Home Loans, for example, provides a 20 basis point discount off its fixed interest rate. That doesn’t necessarily mean they offer the cheapest deal for what you need so make sure you do some research and compare home loans at financial comparison websites like RateCity.

It’s worth considering interest in advance loans when you start preparing your plan of attack this mortgage season, or if you already have an investment property speak to your lender as they may offer this service. You could find yourself with a lot more money to claim at tax time and get a better return on your investment.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Don’t give up on the dream of owning your own home

Wednesday, June 16, 2010

The Australian Bureau of Statistics (ABS) released a report last week (9 June 2010) showing a slump in the number of owner-occupied home loans for new and established properties written in April, which is the lowest it has been since February 2001.

It also showed that the number of housing loans for investment purposes has slightly increased since January 2010. However, the overall level of housing commitments is still lower than the previous two years.

So what are the reasons for this decrease? In 2009, there were a lot of incentives for first homebuyers to enter the market, most importantly the lowest interest rates in a generation and extra Federal and State Government grants. These things had the effect of bringing forward purchases that otherwise would have happened in 2010, and so we’re seeing the after-effects now.

In addition, there is also no doubt, that the rise in interest rates over the last nine months has scared off many homebuyers, with repayments for a $300,000 mortgage having increased by almost $300 per month since before rates began to rise in September 2009.

But these trends also offer an opportunity for some prospective buyers. If you have saved your deposit, have researched the home loan market thoroughly, worked out your budget and have left yourself a buffer of at least two per cent in case rates rise in the future, then you may be able to take advantage of the slowdown in the housing market before the real estate season picks up again in spring.

First homebuyers still need to be careful when entering the property market despite a pause in interest rate increases. Even though interest rates seem to be on hold, it doesn’t mean they won’t start to rise again so first homebuyers who have not experienced paying off a mortgage before need to make sure they don’t over-borrow.

As well as the two per cent buffer, a good guide is to make sure your repayments are less than 30 per cent of your income – which is about $1000 per month for a $60,000 salary and a loan size of about $150,000, otherwise you will be under mortgage stress.

Choosing the right home loan can also make a big difference to your repayments and is just as important as purchasing a property because it can mean thousands of dollars difference to your repayments. 

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Avoid the sting of declined transaction fees

Thursday, May 20, 2010

Next time you go to use an ATM or EFTPOS without knowing if you have enough money in your account, you might want to think twice before going ahead with the transaction. RateCity recently conducted research which found that some financial institutions may still charge you fees for declined transactions at ATMs or EFTPOS machines.

There are several reasons why this fee could be charged including:

  • Entered an incorrect PIN
  • Insufficient funds
  • Enter the incorrect type of account
  • If you abort the transaction before its completed
  • Expired card
  • Attempt a balance on a non-bank ATM

This fee can range up to $4 and averages about $1, depending on the financial institution. Not many financial institutions charge this fee (only about 100 out of more than 800 accounts monitored by RateCity) but it’s still worth checking the fee details of your account.

There are several reasons why your financial institution may charge you such a fee, mainly to cover charges that they may incur by you using another financial institution’s ATM or EFTPOS machine. Whatever the reason, there are ways to ensure you never have to pay this fee.

Here are some guidelines to keep you in the clear:

  • Look for a transaction account that is fee-free or charges you less than other accounts. Compare deals online at RateCity.
  • Check if your bank charges you a fee for declined transactions. It will be in the product disclosure statement.
  • If you think you have entered your PIN incorrectly, press clear and re-enter it instead of pressing enter and hoping for the best, as this could cost you.
  • Check when your card expires and make a note in your calendar reminding you to replace it before the expiration date. Using an expired card may be enough to get stung with a fee.
  • Know your balance prior to making a transaction. Perhaps set up online banking and check your balance.
  • Don’t overdraw on your account
  • If you have automatic direct debits coming from your account, make sure you’re aware when these are being withdrawn and that you have enough funds to cover this. That way you will avoid nasty ‘insufficient funds’ from appearing when making a transaction.
  • Use cash instead of EFTPOS.
Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.
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On the hunt for the better credit card

Friday, April 09, 2010

Treasurer Swan told the media, “Unfortunately this bank seems like it's becoming a serial offender when it comes to taking its customers for a ride.

“There are other credit cards that don't charge interest on fees and no doubt many Westpac customers will be considering those today."

Charging interest on credit card interest and fees will only end up hurting your wallet if you don’t pay your balance in full before the end of the interest free period. So if you don’t pay the balance off, the interest and fees you accrue over a single payment period will be carried over to the next, with additional interest charged on these items if the balance remains again unpaid.

For example, on the average credit card balance of $3,200, a card with an interest rate of 17 per cent per annum will charge about $45 per month if the balance is not repaid. Under interest on interest rules, this $45 will be carried on to subsequent months so the balance will then be $3,245, and when the balance is unpaid interest on top of this will also be charged.

If the card had a $30 fee every time the minimum repayment is not made, then this will also add interest to your debt.

While the additional interest may seem meagre at first, the compounding effects will mean that Australians could wind up losing hundreds or thousands over the life of their debt.

Choice, the consumer activist group, has discovered credit cards in the market that don’t charge interest on interest, as well as others that don’t charge interest on fees. These include cards provided by smaller institutions such as Bendigo Bank, Heritage Building Society, and Teachers Credit Union. In addition, their rates and fees were found to be lower than those of major banks.

Compared to international standards, Australian customers are incredibly disadvantaged by credit card company practices. In the UK for example, customers can go as far as rejecting interest rate rises, and something very common here, unrequested credit limit increases, are banned.

The crucial aspects of a credit card include its interest rate, fees, and the amount of interest-free days it offers. The interest-on-interest feature has enlightened millions of credit card users about another way you can slash your credit costs.

By simply comparing credit card features, you can save on unnecessary charges, and even reduce your annual interest rate significantly. Wayne Swan has turned our attention towards the scattered gems in the credit card market – over the next few months, more and more dissatisfied customers will be joining the hunt.

How long will you put up with extra debt?

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

 

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Mortgages fall as economy recovers

Friday, March 12, 2010

Home loan interest rates have changed like the seasons over the last couple of years, and Australians have long expected a wave of rate jumps in 2010. Following the successive Reserve Bank hikes in 2009, the market for home loans is looking colder for borrowers across the country.

According to the latest Australian Bureau of Statistics (ABS) figures, housing finance commitments for owner occupied properties have fallen at the end of last year by 5.5 percent from November to December (seasonally adjusted).

This dive has concurred with consecutive rate rises in October, November and December 2009. At the latest Reserve Bank meeting earlier this month, the cash rate has been again pushed up by 25 basis points to four per cent.

Even while there has been a large fall in the number of home loan borrowers, the value of loans being written has not fallen as much. In December, the total value of new home loans dropped by 2.8 per cent to $21.9 billion according to ABS. Because the number of home loans is falling faster than the amount Australians are borrowing, the recent interest rate hikes may be squeezing out thousands of first homebuyers from the market.

Without government stimulus help, first homebuyers are battling interest rates in the economic recovery. Many are giving up from searching for affordable loans by pulling out of the market entirely.

The home loans decline picked up pace immediately after the First Home Owners Boost was knocked back from $21,000 to $14,000 on 1 October 2009. From 2010 onwards, the package has been decreased to $7000, which means that we are likely to see even steeper drops for home loans by first homebuyers in the future months.

Construction loans for the building of new homes are also suffering in the new real estate season, after falling 6.4 per cent in December according to the ABS report. If this trend continues, it could place even greater pressure on housing affordability and thus higher interest rates.

Demand for new properties and investment loans seem to be the healthiest features of the market, rising three per cent and 1.9 per cent respectively.

So should potential home loan borrowers look towards the future of 2010 with hope or concern? With the government guarantee for lenders dated to end on 31 March smaller mortgage providers may become pickier about borrowers as they lose the safety net afforded to them during the financial crisis.

This could put even greater pressure on first homebuyers to find a good home loan deal because of fewer lenders to choose from.

Everyone has been expecting the rate rises for months. Rather than avoiding home loans altogether, borrowers primed for a home of their own are comparing interest rates and repayment options to find the ones that will give them the best chances against rising rates.

So make sure you know the home loan market before diving in head first to a major financial decision. After all, you will benefit from the potential savings.

 

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Sitting on spare cash?

Wednesday, January 20, 2010

While Australians are being told to brace themselves for rising interest rates this year, you should keep in mind that not all interest rates are expected to climb.

Interest rates on mortgages are tipped to increase one per cent by 2011 and it is likely that personal loans, car loans and credit cards will follow the lead.

The current average standard variable home loan interest rate is sitting at 6.3 per cent so this means an extra one per cent will see repayments for the average $275,000 mortgage increase by about $173 per month.

Mortgagees should start preparing for the next wave of rate rises, which could be as soon as a couple of weeks, following the first Reserve Bank board meeting of the year in February. The best way to prepare for rising rates is to add as much as you can to your repayments in an offset account. This will help absorb the impact when rates rise and also save you on interest and reduce your debt.

The best part about using your spare cash for your mortgage is that the interest you save is exempt from being taxed whereas if you deposited your savings into an account, the interest you earn is taxed.

But for those who don’t have a mortgage but have some spare cash and are looking for a safe investment, it is worth shopping around for a term deposit account.

We have seen throughout 2009 historically high interest rates on term deposit accounts such as Westpac’s five-year term deposit rate of eight per cent per annum – one of the best deals on the market. Other good value rates include seven per cent for three-year term deposits, with all the major four banks – ANZ, Commonwealth Bank, National Australia Bank (NAB) and Westpac – as well as some others including Suncorp Bank.

But recently, RateCity research has found that some financial institutions have started to drop their rates. RaboPlus is one of the most recent financial institutions to have dropped some of its term deposit rates, moving its five-year term deposit down by 15 basis points to 6.85 per cent.

ING Direct dropped some of its term deposits earlier this month by as much as 0.45 per cent. And NAB was the latest of the four majors to drop one of its term deposits – its one-year rate was lowered by 10 basis points to six per cent on 11 January. NAB also dropped other term deposit rates on 4 January including its six-month by 2.35 per cent down to 3.65 per cent.

What’s unusual about these rates is that they are so much higher than the Reserve Bank cash rate whereas historically they are about one per cent or closer aligned to the Reserve Bank. For instance, the average three-year term deposit rate in January 2009 was 0.29 per cent below the cash rate and now it is 226 basis points higher.

Now is definitely the time to consider term deposits as we don’t expect these high rates to last much longer.

Month
RBA cash rate (%)
Average 1-year term deposit (%)
Average 3-year term deposit (%)
Dec-08
4.25
4.56
5.27
Jan-09
4.25
3.83
4.54
Feb-09
3.25
3.66
3.94
Mar-09
3.25
3.00
3.72
Apr-09
3.00
2.98
3.44
May-09
3.00
2.99
3.51
Jun-09
3.00
3.05
3.57
Jul-09
3.00
3.31
4.00
Aug-09
3.00
3.44
4.24
Sep-09
3.00
3.73
4.63
Oct-09
3.25
3.82
4.81
Nov-09
3.50
4.74
5.69
Dec-09
3.75
4.87
6.22
Jan-09
3.75
5.19
6.01

                                    Note: average term deposit rates based on $5,000 balance.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

 

 

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Give fees the flick

Wednesday, December 02, 2009

The big banks made headlines in 2009, announcing plans to slash or scrap a range of fees on everyday banking. But there are plenty of accounts offering easy fee-free banking – if you know where to look.

A transaction account is essential for most of us. But they often come laden with fees and charges, making everyday accounts a source of rich pickings for financial institutions. In 2008 alone, our banks collectively pocketed $1.8 billion in fees on deposit accounts.

Some penalty fees are avoidable, but others like account keeping fees are not. However, there is a range of accounts that have done away with the bulk of fees – provided you follow certain conditions. Meet these, and you could save a fortune each year in unwanted charges.

HSBC’s Online Savings account offers many of the features of a transaction account but charges no monthly fees at all. Other charges may apply, and you’ll need a minimum of $2,000 to open the account.

Bankwest’s Zero Transaction Account charges zero monthly transactions fees, and with an ATM network comprising Bankwest machines plus those of the majors – ANZ, National Australia Bank, Commonwealth Bank and Westpac – it shouldn’t be hard to avoid foreign ATM fees. You’ll need to tip at least $2,000 into the account each month to enjoy the fee savings, which is achievable if you have your wage or salary credited to the account.

St George Bank’s/BankSA Complete Freedom account also waives the monthly $5 fee if deposits total $2,000-plus each month.

In a different vein, Bank of Queensland’s Reverse Charges account waives the monthly $4 fee and pays account holders an extra $2 per month if you maintain a minimum monthly balance of $2,000. It’s a perk worth up to $72 annually.

In late 2009, ING Direct launched its Orange Everyday account that offers fee-free banking with even fewer strings attached. There are no monthly fees, no overdrawn fees and if ATM withdrawals are for $200 or more, you pay zero ATM fees at any ATM in Australia. Stick to cash withdrawals of $200 or more via EFTPOS and ING Direct will pay you 50 cents per transaction.

Accounts that pay you for your everyday banking? Now that really does deserve some fanfare. Trouble is, changing bank accounts comes with the hassle of redirecting the direct debits and credits that flow into and out of our accounts. If this sounds like hard work, an easy way to save on fees is by doing the majority of your banking online or over the phone.

Don’t waste your hard earned money on bank fees when it is easily avoided by shopping around online and scoring the best deal. Who knows? It could even save you money!

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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New mortgage season, new rules

Friday, November 06, 2009

In the new interest rate season following the first hikes to the official cash rate since March 2008, Australians will need to adjust to fresh surroundings if they are going to enjoy its fruits.

The first sign of change is the decline of first homebuyers, who have taken a few steps back to make more room for a returning breed of home owners – the investors.

In just two months, the number of owner occupied housing loans has fallen from its June peak of 65,151 to only 62,718 in August – a drop of 3.73 per cent according to the Australian Bureau of Statistics. The value of owner occupied housing loans has fallen by 4.25 per cent in the same period. While this has been happening, the value of investment housing loans has increased by 6.1 per cent.

Of all the new home loans in August, only 24.7 per cent were taken out by first homebuyers, a drop from 27.1 per cent in June. This will be unsurprising to some, as the benefits of the First Home Owners Boosts have begun to wane.

While interest rates are still relatively low, property returns remain attractive compared to keeping cash in the bank. And the outlook is set for even greater returns according to some experts.

Research from BIS Shrapnel has predicted that house prices will rise by 20 per cent over the next three years, due to our ballooning population and shortage of housing supply.

So how can you use investment loans to grow your wealth?

Let’s take Joel, who plans to invest in a $375,000 property and needs a $300,000 loan. If he chooses a three-year fixed interest-only investment loan with the average rate of 7.25 per cent p.a., the total repayments after three years would cost Joel $65,250.

For this scenario, if we ignore other fees like stamp duty, legal costs and tax calculations, but include a rental income of $400 a week, this would total after three years $57,600.

By subtracting Joel’s rental income from his repayment costs, he would have paid $7,650 in expenses after three years.

If BIS Shrapnel’s estimation is correct then Joel can sell his property for $450,000 in three years. That means Joel would have earned $67,350 in just three years – not a bad result.

As the market winds change direction, we need to replan our money-making tactics. You don’t want to waste all your energy fighting the gales – learn about unfamiliar products and rates, and let the natural forces carry you and your wealth to dizzying heights.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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MORE ARTICLES

Savings boost – how to ride the interest rate wave

Take advantage of first homebuyer accounts

Spring clean your savings plan

Win the battle of mortgage stress

Don’t be fooled by teaser rates

Slashing bank fees: a step in the right direction




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