Is rolling your debt into one a smart move?
Is it smart to consolidate your cash loans, accounts, and credit cards with several banks? An expert has something to say and be taken into consideration before making any moves.
Gen Ys Justine Davies says no! She goes on to explain this response saying that having more products with one provider will make it more difficult to change your provider when a better deal comes along. She further stated that it is unlikely for one bank to be offering something the best deals on all their products.
Davies related that when she was still starting as a financial planner and working for one of the Big Four banks, she has observed that it is all about “customer entanglement”. The bankers would write their sales figures up on the board while the manager quizzes them about how much cross-selling they had been able to do. Were they able to sell credit cards, home insurance, car insurance, or a margin payday loans, perhaps?
They were encouraged to get their customers entangled and if they are unable to earn their loyalty by way of great service, then they should at least be able to make it difficult for the customers to shift their products to other providers that they would end up trying.
Luckily, banks nowadays are more enlightened and are focusing more on “share of wallet”. This means that they are now identifying customers who are more profitable for them and focusing their efforts into attracting them.
To quote the an Australian Bankers’ Association report, “to identify customer segments that offer good returns, marketers have to measure profitability”. This is the reason why a penniless student from a university could end up listening to hold music for the longest time while the affluent bank customers probably have a direct number to skip the queue.
