Q&As
QPlease bear with me when reading this letter to you. I may well be wrong and I’d hate to be accused of sullying anyone’s name.
I suspect the below copied message to me could be a scam.
Just the other day I looked at term deposits online and was interested (excuse the pun) in this website. I opened the page and was asked to fill in my details which I duly did.
I received a call from someone this morning but I was too busy to take the call — the word Citibank in their message struck a chord though, as I’ve heard of several people being caught in scams through a similarly named method.
I may be wrong and I have no way of proving if this is the case, but I reckon I could easily be dragged into investing with this person as the website seems so plausible. Particularly as it portrays the logos of so many of our well respected banks.
I won’t be investing with this person, but thought it might be worth passing on my suspicions to yourself.
A“Be afraid. Be very afraid,” as Geena Davis said in 1986 horror film The Fly.
As soon as I received your email, I replied, “This looks horribly like the websites that have scammed people recently. I would stay well away.”
Firstly you are asked how much money you want to invest, the term, and your start date, so I filled that out. So far so good.
But the website tool then said, “Searching highest interest rates in Ireland based on your criteria.” Ireland? Well maybe they have higher rates there. But given that the site boasts that it is, “Finding the best term deposit savings rates in New Zealand”, something is amiss.
The tool then told me, “Success! Please enter your details to receive your personalised savings offer,” and asked for my name, email address and phone number. At that point I bowed out.
But you didn’t at the same stage. I doubt if the phone call you received will be the last. If they call again, I suggest you hang up straight away. Don’t let them start their sales pitch.
While I was on the website, I scrolled to the bottom, where I learnt the company is incorporated in the Seychelles. This country, in the Indian Ocean east of mainland Africa, is sometimes said to be a tax haven. I’m not sure how easy it would be to contact the company if something went wrong with your investment.
And don’t be impressed by the big five bank logos. They could easily be copied from the bank websites. What’s more, they imply that the website doesn’t consider smaller banks, who often offer higher interest.
But my main point is this: Even if the website is genuine, you don’t need it. On interest.co.nz you won’t get a “personalised offer”. But you will get lists of term deposits and interest rates offered by all the New Zealand banks and non-banks. And you don’t have to give anyone your personal information.
Footnote: I’ve asked this before, but let’s try again. If any reader has ever got into a good investment through a phone call from a stranger, let’s hear about it. In the past I’ve never received any replies.
QMy mum was not a wealthy woman, but was very family focused and generously left each of her grandchildren $30,000 when she died. We would like to invest it for our kids (age 14 and 16), but would rather they didn’t know they had it for now.
If we invest in our names we will pay our marginal tax rates (33 per cent). Is there any way we can invest in their names to get their tax rates (10.5 per cent), but in a way that they don’t know about it?
AOne possibility is KiwiSaver. It would give your teens a great start on saving for a first home, and the returns would be taxed at their rate. You could ask the provider of your choice if they can communicate with just you and not the teens.
But KiwiSaver won’t work if you want the money to be available for tertiary education or starting a business.
Most providers also offer non-KiwiSaver funds that don’t tie up your savings, and some of those cater for under-18s. But if the money might be spent in just a few years, check the provider has a very low-risk fund that invests only in cash, not just a fairly low-risk conservative fund that holds largely bonds. As we’ve seen recently, bond values can be quite volatile at times. You don’t want to be withdrawing in the middle of a downturn.
The other short-term option is a bank term deposit. At current interest rates you can get a decent return.
As I said last week, the following offer TDs for teenagers, taxed at their rate: ASB, BNZ, Heartland, Kiwibank, Rabobank, SBS and Westpac. (ANZ doesn’t, but is considering changing that.)
However, at BNZ and Kiwibank anyone 13 or over would be involved in opening a TD.
And the other banks raise possible problems with keeping an investment quiet:
Westpac: “If a child asked us whether they have a term deposit or managed fund account with us — and their parent had set up either in the child’s name — we are obliged by legislation to confirm they have one. Also, we are required to send both term deposit and managed funds statements out in the mail, addressed to the child. However, the parent can choose what address the statements are sent to.
ASB: “The parent would act as an administrator, and ownership of the investment would revert to the child once they turned 18. Communications on these investments would be addressed to the owner of the investment (the child), as well as the parent/guardian, and either party could request information from us about the investment.” They also note that a managed fund investment would show up in a child’s online or mobile banking.
Rabobank, “If the child was to look into any investments listed under their IRD number, they’d be able to find the details of the term deposit and any other bank investments that are in their name. Once the child turns 18, they will at that stage be deemed an adult and we will attempt to get in touch with them to determine what they want to do with the relevant account.”
All in all, it might be easier to just tell the kids what’s happening. In the process, they could learn about investing.
QThanks for publishing my email last week — where I suggested a couple could guarantee their son’s mortgage rather than using a reverse mortgage to give him money for a house deposit. But maybe I should have been a bit clearer.
I’m a mortgage adviser and, like you, I would not advise that the couple (or anyone else) guarantee all the mortgage. I was suggesting that they guarantee the deposit only.
Let’s say the kids have a 5 per cent deposit (most banks require 5 per cent genuine savings, which includes KiwiSaver). The kids and parents then have a loan of 15 per cent that is secured by the parents’ property.
The balance of the lending, 80 per cent, is secured against the purchased property and only in the kids’ names. The kids then make the payments for all the debt.
All loans would be at standard mortgage rates for less than 80 per cent LVR (the best rates), not 9.5 per cent for the reverse mortgage.
If there are any problems then yes, the parents could obtain a reverse mortgage to cover the debt they are liable for (the 15 per cent), putting them in the originally suggested scenario.
We do this a lot. The smaller loan is often over a shorter term so the parents’ security can be released sooner — either by being paid off or the value of the kids’ property increasing and the total mortgage amount becoming less than 80 per cent.
AA creative idea. I like it. But I had one question for you: “Would a bank be willing to lend the 15 per cent (with parent guarantee), in addition to 80 per cent, to the kids? And if so, would that all be at 6.5 per cent?”
Your reply: “Yes, as long as the kids can service 95 per cent and the parents service 15 per cent (although not paying it). The parents may not be able to service this if retired only on NZ Super, cannot confirm without review, but I wanted to ensure people knew there is an option.”
Still, if the parents found they had to service the debt — in other words make payments on it — they could use a reverse mortgage at that stage.
So, all in all, this is certainly something for the couple — and others — to consider.
QLast November my wife and I switched all our banking from BNZ and ASB over to Kiwibank, and would have done it years earlier but Kiwibank did not promote business banking.
We really found the whole process very simple, with the help of the local Kiwibank staff at Orewa.
Automatic payments etc were co-ordinated, and once we agreed on the switch date it was initiated by Kiwibank into the three nominated accounts we wanted. I must say as customers of the ASB and BNZ for approximately 40 to 45 years, neither of them inquired why we were switching.
The only frustrating item was requesting a Platinum credit card from Kiwibank for a rather small limit ($15,000), as we were going overseas. This was more than covered by two mortgage-free properties and $300,000 in an investment portfolio.
Their credit card business is all handled from Wellington, and they insisted it was a no phone contact office, which made the issue far more frustrating than necessary. Multitudes of queries both ways could only be dealt with by email, and their messages refused to supply surnames and contact phone numbers even after numerous requests. We did obtain it eventually.
I guess we are not their ideal credit card customers with no debts, no mortgages and only small income from pensions and investments, and have always paid on time.
I must say the face to face contact with staff at their Orewa branch then and now is exemplary.
AIt’s good to know that most of the switch went smoothly — although the contrast between the service at your local branch and the credit card office is stark.
Thanks to you and others for responding to my request for stories about switching banks in the last year. I will forward your letters to the Commerce Commission, which is looking into personal banking.
QI am in the process of leaving two banks who appear to not value my custom, but I am doing it gradually.
One of these, BNZ, I am stuck with for the moment because they hold the mortgage on my property, and I took a smallish loan to buy a vehicle, offset by the balance in my account so it attracts no interest. When the loan is repaid I will be closing accounts and requesting discharge of the mortgage.
I have only one direct debit on any accounts, for my insurance. I dislike direct debits and automatic payments so control all the payments, which has served me well for many years and means I do not expect the kind of nightmare you wrote about last week.
So I will be one of those customers who just folds their tent and moves on. Sadly I don’t believe either BNZ or Westpac will even notice. My new bank is Kiwibank, and so far I have been delighted with every aspect of this new relationship
AIt’s interesting that you and the correspondent above both switched to a somewhat smaller bank.
Another reader didn’t switch in the last year, but several years ago, from ASB to TSB. She “couldn’t be happier I changed! TSB has been excellent, and whenever I’ve renewed my mortgage are always happy to discount the mortgage rate when I ask nicely. Just recently they knocked over 0.5 per cent off the rate.”
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Mary Holm, ONZM, is a freelance journalist, a seminar presenter and a bestselling author on personal finance. She is a director of Financial Services Complaints Ltd (FSCL) and a former director of the Financial Markets Authority. Her opinions are personal, and do not reflect the position of any organisation in which she holds office. Mary’s advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it. Send questions to [email protected] or click here. Letters should not exceed 200 words. We won’t publish your name. Please provide a (preferably daytime) phone number. Unfortunately, Mary cannot answer all questions, correspond directly with readers, or give financial advice.