Appropriate response to ABSA

blunomore

blunomore

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Together, my better half and I currently have the folllowing with ABSA -

2 x vehicles financed
1 x home loan
2 x credit cards
1 x savings account
1 x cheque account (with overdraft facility)
1 x money market account

Total = 8 accounts

I'd say that makes us good / loyal clients ... wouldn't you?

We requested a reduction in the interest rate on the overdraft facility. It is currently already at prime + 1.5%.

One would imagine that giving as much business to ABSA as we are currently doing, these reductions in interest rates would be highly negotiable .... ?

I got this pathetic response from our "Small Business Manager":

• The current Interest rate on Your overdraft facility is P+1.5%
• According to Absa Policy the interest rate that was supposed to be charged is P + 2.5%.
• Hence the current interest rate is lower then that proposed by the Policy.

Accordingly the Request has been declined.
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How should I respond to them? (No swearing allowed in correspondence) :)
 
It's the same story everywhere. Bank's margins are under pressure - many reasons, one being the low repo rate (something called the endowment effect). Bad news for us unfortunately.

Then again, prime is so low atm it's great news!
 
SiriS said:
It's the same story everywhere. Bank's margins are under pressure - many reasons, one being the low repo rate (something called the endowment effect). Bad news for us unfortunately.

Then again, prime is so low atm it's great news!
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You are not helping :D

From our history, are we not loyal clients? Do we not deserve more?

Payments are always on time. NO defaulting.
 
blunomore said:
You are not helping :D

From our history, are we not loyal clients? Do we not deserve more?

Payments are always on time. NO defaulting.
Click to expand...

I know, I know. :)

Point is: Banks' margins are under pressure. Almost every business I speak to are having their facilities repriced upwards.
 
ABSA suck cheese balls.... They did the same to me, wanted to increase my bond facility by R100,000 so I can pay for renovations to our house - they said sure, you just need to accept the new interest rate.. which would have cost me a fortune over 10 years. Ended up putting the renovations on my credit card.

As soon as I make the grade for RMB or Investec, I'm gone - and nothing ABSA does will get me to stay.
 
SiriS said:
I know, I know. :)

Point is: Banks' margins are under pressure. Almost every business I speak to are having their facilities repriced upwards.
Click to expand...

So I'll just tell him that if they need help, we can borrow them a few bucks? :D
 
Guy I work with had his wifes car at 18% and the interest rates have really come down. He asked ABSA to reduce it and they refused.
 
xrapidx said:
You need to earn +R1,000,000 - and then your application will be considered. :p
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this must be for some special accounts there?
I know ppl with a private banking account at investec who are not on a bar a year
 
xrapidx said:
ABSA suck cheese balls.... They did the same to me, wanted to increase my bond facility by R100,000 so I can pay for renovations to our house - they said sure, you just need to accept the new interest rate.. which would have cost me a fortune over 10 years. Ended up putting the renovations on my credit card.

As soon as I make the grade for RMB or Investec, I'm gone - and nothing ABSA does will get me to stay.
Click to expand...

Having just left Investec...don't hold your breath for that one. Draconian credit policies, where they tell you how to structure a deal on car finance. Promises of "preferential interest rates" which never come true.

Small example, after having banked with Investec for 5 years, applied for car finance. It took them 3 days to come back with an answer of Prime +0.5%, demanding a deposit. Wesbank replied within 7 hours offering Prime -0.25% and was happy for me to structure how I wanted, deposit, no deposit, residual, no residual. Went back to Investec...nothing they can do sorry cheers bye. Same story with my home loan. Long story short, moved banking to FNB PC.
 
Back on topic, in response to the OP...

There is nothing to really reply to ABSA. They have priced the risk they see in you, and that is that. If policy is supposed to be prime +2.5%, then they are already showing you that you are a valued customer. The problem with overdrafts is it's unsecured debt. You could max it out, go oops sorry can't pay and the bank just looses.

With a house or car, at least they have an asset to reposes and try recover some of the funds.

In my oppinion, Prime +1.5% is fairly reasonable. I've seen overdrafts priced at Prime +4%.
 
tau1z said:
this must be for some special accounts there?
I know ppl with a private banking account at investec who are not on a bar a year
Click to expand...

They don't apply the R1m rule to professionals, such as Doctors, Lawyers, CA's etc.

blunomore said:
The benefits ?
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None really. They charge R275 a month, give you a half useless/half useful private banker, you can draw from any ATM without incurring additional charges and deliver your card.

I suppose benefits exist for high wealth individuals who needs wealth management services etc, but for your everyday banking not much.

One benefit is their call center is superbly run and filled with people who know what they are doing.
 
broken1 said:
Back on topic, in response to the OP...

There is nothing to really reply to ABSA. They have priced the risk they see in you, and that is that. If policy is supposed to be prime +2.5%, then they are already showing you that you are a valued customer. The problem with overdrafts is it's unsecured debt. You could max it out, go oops sorry can't pay and the bank just looses.

With a house or car, at least they have an asset to reposes and try recover some of the funds.

In my oppinion, Prime +1.5% is fairly reasonable. I've seen overdrafts priced at Prime +4%.
Click to expand...



Risk?? They see us as a risk? On what planet??

There is a load of money in the money market account, we recently paid in large lump sums into our bond and as mentioned, we never default on credit card payment.

We are as low risk as they come.
 
broken1 said:
They don't apply the R1m rule to professionals, such as Doctors, Lawyers, CA's etc.
Click to expand...

he has a sports science degree .... so its not that...he does fairly well in IT, but not 1 bar well...
 
1 Mill for an Investec account?
I was under the impression the requirements were much lower?
 
blunomore said:
Risk?? They see us as a risk? On what planet??

There is a load of money in the money market account, we recently paid in large lump sums into our bond and as mentioned, we never default on credit card payment.

We are as low risk as they come.
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Low risk yes...but there is always a risk to the bank.

If you borrowing money, there is a risk you won't pay it back. If you don't borrow money, the risk lies in the fact they don't know how good you are at paying back (hence first time home owners and car buyers get nailed on the interest rate).

In a particular case, the bank is also exposed to concentration risk, for example, if you work in Car Sales, and that sector experiences a slow down - many people in car sales will loose jobs etc, default on debt repayments. If you live in the Free State, what if a tragedy hits and every defaults on debt repayments.

I agree from your perspective, you are low risk. You have a full view on where you stand financially, and have contingency plans if the **** hits the fan. To the bank, they only have a snapshot of what they can see today, and no guarantee you will still be able to pay everything in 12 months time.

Legally, even though you have more in your money market than the overdraft required, they have to right to that money as it's yours. They would have to sue you for it and you could simply withdraw it and spend it/give it away/move it to another bank.
 
tau1z said:
he has a sports science degree .... so its not that...he does fairly well in IT, but not 1 bar well...
Click to expand...

Not what you know but who you know maybe?

To be honest, having banked with them - they don't offer anything so special I need to beg to be their customer.
 
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