I will review all of my financial accounts - say it like a mantra....
Mortgage accounts, bank accounts, credit cards – all of them usually have a fee attached and you may not be happy when you work out how much all of this is costing you each year;
Lets say you have a home loan with a $395 annual fee, 2 or 3 credit cards – most cards have a $60 - $90 annual fee, that’s a couple of hundred dollars there – and a bank account hidden away with a $5 or $10 monthly fee; possibly some ATM access fees thrown in as well.
Did you know that a lot of the home loan packages will allow for an annual fee on a credit card and the monthly bank account fee to be waived? If you need more than one bank account – and I understand the way lots of people bank, then you can consider one of the lenders who offer multiple accounts under this one fee structure. Right there you are saving potentially hundreds of dollars a year.
A fee or interest – no matter what it is called it’s a cost all the same and has to be allowed for in your calculating the competitiveness of your current finances. Lets say conservatively that you’re paying $180 for the credit cards and $120 on two bank accounts - $400 in total – that’s an equivalent of around 0.13% interest rate on an average $300,000 home loan.
Even interest free facilities are not ‘no cost’ if they come with a monthly fee. Keep that in mind.
To get rid of unnecessary fees consider if you do need more than one account or credit card, and can they be brought under your mortgage package fee? (And we’re assuming here that you’ve already looked at your home loan to make sure its competitive.) Pay off and close any unnecessary accounts – this will help you with your borrowing power if you want to look at upgrading or buying a second home as well.