Have you ever noticed the longer a relationship is, the more likely those in the relationship will take advantage of each other? Often true in dating, marriage, and even banking.
Yes banks, like them or not, they have been known to take advantage of long-time loyal customers. Banks are keenly aware that a long-time loyal customer is less likely to shop around and get a second opinion. Yet shopping around is a simple way to ensure you are always getting a good deal.
Now I am not suggesting all banks are bad, but I have seen many loyal customers who have had the wool pulled over their eyes because their bank has become too comfortable with the relationship.
When you have been married for a long time, the indiscretions are usually minor and amount to dirty socks being left on the bedroom floor, or failing to put the lid back on the toothpaste. Incidentally, both are criminal offences in my home. However, in your case, when your bank begins to treat you like Zsa Zsa Gabor treated her 8th husband, you know you have a problem.
Mortgage renewals are a perfect example. When a client has an existing mortgage they are typically mailed a notice with various rate options. The idea is for the borrower to choose an option, sign it, and send it back in. However, the rates quoted on the renewal notices are typically 0.50% -1.00% higher than the best available rates at any given time!
If you have a 30 year $200,000 mortgage, an increase of 0.50% over the life of the mortgage amounts to over $21,000 in interest! Not a small sum of money.
The crazy thing is that new customers who have no pre-existing relationship will typically be offered lower, more attractive rates in order to convince them to become a customer. Then, unfortunately, once you are a customer, the onus is on you to make sure you always get a good deal.
My suggestion is as follows – begin dating your bank, but do not get married. Commitment is sound advice for most relationships, but it can be very costly when it comes to your finances. The best way to ensure your bank treats you like a first date instead of a 3rd marriage is to get educated. Understand your options and for heaven sakes, always shop around before you sign on the dotted line. Make a few calls to make sure you and your business are courted, not taken advantage of!