Q&As
- Earthquake victim faces an old question: whether to invest spare money or repay a loan
- Reader escapes “an endless loop” of credit card payments after using an internet Q&A service
- A “me too” letter raises questions about a bank’s policy on fees
QMy daughter recently lost her house to the Canterbury earthquake.
Should she invest her EQC payment and keep making regular payments on her mortgage? She has the option to pay off the mortgage and then redraw when her house is rebuilt. I do not think there is a penalty for redrawing.
There still is no time frame as to how long it will be before her house can be rebuilt.
Many people must be in this position, so would appreciate your comments.
AMy sympathy to your daughter. It must be hard enough losing your house, without having to also worry about financial decisions.
Her situation is actually a variation on the common question: Is it better to put spare money into repaying a loan or into an investment? In your daughter’s case, substitute Earthquake Commission money for spare money.
The answer is that it’s almost always better to repay the loan.
Let’s say your daughter’s mortgage interest is 6 per cent. Decreasing the amount on which she is paying 6 per cent will boost her wealth as much as earning 6 per cent — after fees and taxes — on an investment. And she won’t get 6 per cent or more on an investment unless she takes a fair bit of risk, which wouldn’t be wise in her situation.
If she doesn’t repay the mortgage, she could well end up making mortgage payments of, say, $1000 a month while receiving $600 a month on a bank deposit. She would be $400 a month worse off than if she had repaid the loan.
There are some exceptions to this. She might be better off investing the EQC money if:
- She has a fixed rate loan and will have to pay a big penalty for repaying it early.
- There will be substantial costs for restarting the mortgage when her new house is built.
- Your daughter ends up with a higher-interest mortgage on the new house than if she had kept up the old mortgage.
The first two “ifs” she can check up on now. The third is a bit of a gamble — but it could work the other way, with her getting a cheaper new mortgage. Anyway, it probably won’t make a huge difference.
QAn online organisation offers to solve any problem on any topic for no charge unless you approve their answer.
I first had to enter my credit card details, and the answer proved to be nothing more than a referral to a Microsoft site. Payment was not justified, so I rejected their reply. Nevertheless they deducted NZ$28 from my Visa account. I was annoyed but wrote it off to a bad experience — that was in May.
Not until my November Visa statement arrived did I realise that $28 monthly had been deducted from my Visa for the past six months!
I immediately phoned ANZ Visa to stop all further payments but they refused, saying those instructions would have to come from the company.
I said that I would therefore close my Visa account, but they said I would still be liable for the ongoing payments. My pleading that these thieves had no authority to deduct any payments whatsoever was rejected — lodge a formal complaint in writing and they would respond 90 days later!
Entire web pages are devoted to reporting scams from this organization. There you find identical experiences to mine and even worse, where significant sums have been withdrawn from customer’s Visa accounts without authority.
Several attempts to contact the company have all failed. So I am kept in an endless loop, with no end in sight. How does one break out!
APossibly by writing to this column — although that’s not the way it should be.
On receiving your letter, I emailed the online company and also ANZ Visa. First to respond was the company, which wrote, “I’m sorry, but I was unable to confirm the information in your email with the account you provided, etc etc” Given that I don’t have an account, and that I had written that I was a columnist trying to help a reader, I was just a weeny bit suspicious that it was a stock answer.
However, shortly after that you emailed me: “Don’t know what missive you sent to the company, but it appears to have jolted some action as you see below. Perhaps ANZ Visa added their bit?”
The company had sent you the following: “I’m terribly sorry for any frustration we may have caused you. As requested, I have canceled your subscription payment and turned off the feature for you. In reference to your payment, since we have canceled the charge in our system, you should see a credit for NZ$140 on your statement within 3–5 business days…”
You added, “I had sent four complaints, both by email and via their own web pages, all demanding an urgent reply without success. A narrow escape (assuming the credit turns up!) and a salutary lesson — most grateful for your assistance.”
Whether I deserve your gratitude, we will probably never know.
Meanwhile, ANZ sent me a long email. Here are some of the key points, followed by the responses I sent back:
- “If a customer contacts us within 60 days of the disputed transaction appearing in their account, this enables us to start dispute proceedings with Visa or MasterCard. While we investigate a charge we suspend the transaction(s), or provide a credit, as long as we are within the 60-day timeframe and we have a dispute right under the Visa and MasterCard rules.”
Me: But you didn’t suspend the ongoing monthly charges — which would be within the 60-day timeframe.
- “In cases such as this one, where the company cannot be contacted, the customer should immediately contact the bank, as this customer has done, to enable the bank to cancel the authority on the customer’s behalf.”
Me: You refused to cancel.
- It’s not normal to take 90 days to respond to a formal complaint. “Of course we need time to investigate the details of any complaint, but if we receive a formal complaint we respond within 7 days. If we receive a dispute on a credit card transaction we respond within 14 business days.”
Me: How come he was told 90 days?
To my further questions, ANZ replied that, “we cannot go into the specifics of this situation as the reader has not been identified to us.” Also, said the spokeswoman, there are privacy issues.
However, she went on to say, “Like you we will also assume that what your reader has said is correct. If this is the case we can only apologise for any confusion that came from your reader’s contact with ANZ.
“In our response we have provided our policy for the situation you’ve provided and how we would normally handle this issue. If your reader has experienced anything contrary to this process, we would appreciate an opportunity to resolve this issue directly with your reader.”
You might want to take up the offer — even though your problem is apparently solved. And I’m sure you don’t need me to spell out the two clear messages from all this:
- Do an internet search on a company before you sign up to pay it.
- Keep an eye on your credit card statements.
QOne year ago, after returning from an overseas trip, the ASB also got “up my nose” with exactly the same stunt as described in your column last week. I also had the $2000 I had deposited in my credit card account transferred back to a regular account and later found I had been charged $1 to do that.
The $1 was refunded, but I, too, was told they would make a note on my records that a refund would not be made in future. You said last week that perhaps the supervisor had had a bad day. Does this mean that all their supervisors have bad days every day? Would it not suggest that it is standard practice to make a note to not make future refunds?
I did feel I was being pathetic ringing about the $1, but I was made to feel pathetic by this person. Consequently I have since transferred a number of investments from this bank.
AASB is sticking to its story. “It is not our practice to recommend in our customer notes whether or not future fees should be refunded, and we would not expect this customer’s notes to record that,” says Shaun Drylie, general manager cards, transactions and payments.
As a result of your letter and the one published last week, he says, “We have reminded our teams that they do have the discretion to waive fees based on their analysis of the customer’s specific circumstances, and that they should ensure that the customer notes they record should not inhibit other staff members from making this assessment at a future time.”
That’s good to hear. Bad days or not, hopefully we’ve heard the last of this.
I also pointed out to Drylie that both you and last week’s correspondent have transferred money from ASB, and asked, “Doesn’t it seem silly for the bank to continue to charge $1 in these circumstances and lose business by doing it?”
He replied that the bank is always reviewing its products, services and fees. “This customer feedback is very important to us, and we will take it into account during our next fee review. It causes us great concern to hear that a second customer has had a bad experience with us, and we are very sorry that this has occurred.”
So there we have it, two sorry banks in one column. Here hoping there’ll be less call for apologies in 2011.
LAST COLUMN OF THE YEAR
Excerpt from an email I received this week: “I enjoy reading your articles in the Herald every Saturday and often have a good laugh, but also like the diverse type of people who write to you and of course your response.”
That just might be the best compliment that correspondents to this column and I could ever receive. Together we’ve made personal finance entertaining. That’s no mean achievement.
A big thanks to all you readers who take the trouble to write — especially the critical ones who keep me on my toes. Each year, a bigger majority of correspondents don’t make it into the paper, and I feel bad about that. But do keep trying.
That’s it for 2010. Drive, swim and spend carefully over the Christmas break. See you back here for more laughs, or at least the occasional smile, on January 22.
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Mary Holm is a freelance journalist, a director of Financial Services Complaints Ltd (FSCL), a seminar presenter and a bestselling author on personal finance. From 2011 to 2019 she was a founding 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.