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Loyalty to the Bank

Loyalty is a virtue. I hardly think that’s a controversial claim.


It’s the reason we love dogs so much. It’s the thing that gets countless warm-blooded males out of bed on a cold Saturday morning just to kick around a ball. The unity, the pride, the familiarity of it all. It creates passion where it didn’t previously exist, it drives kids to grind away at new skills while no one is watching and it leads otherwise selfish people to act outside of themselves in the interest of the group.


Who could question that this isn’t one of the highest qualities a man can possess?

Yes loyalty is undeniably a virtue.


But does that mean that it should be applied to all aspects of life? For example, when it comes to the banks...


Of course, you’re likely sensing a Strawman set up here, but hear me out. I’m not about to describe those older folks who have been with Westpac for thirty-five years and would tie themselves to the mast of that ship even if you told them their bank manager was a serial killer. They are the exception and I will rule them out of this conversation completely.


The group I’m really referring to are victims of an entirely different strain of loyalty. Those in their mid-twenties, who have held a savings account since their teen years, perhaps have used some form of shared expense account to pay their rent and utilities into, but not much more than that.

These are the ones who most commonly shoot themselves in the foot when it comes to entering the mortgage process. Understandably when confronted by the intimidating world of serious debt and the first major purchase of their lives, the first instinct is to reach for the familiar- that friendly Mrs Penny who helped you get your first debit card, her ruby red broach bringing back warm memories of your first overdraft account every time you wander into her poesy scented office.


Understandable, but reason enough to get a subpar deal on your mortgage terms?

If you could get a lower interest rate, a chunkier cash back and maybe even a larger pre-approval figure, wouldn’t you jump at it?

Most people would, but in a lot of cases it doesn’t even cross their mind.

Which brings us to the crux of the matter.


Loyalty isn't necessarily a conscious thing. Sometimes it just comes down to the easiest option. The bank you've used for years is at the front of your mind, you don’t have to open a new account or talk to a mortgage broker (even though both are free) You don’t have to deal with the hassle of shopping around (even if you can get a much better deal)


This form of loyalty may be wearing the mask of virtue, but when you really dig into the detail the set of reasons outlined above are much more common.


And there's nothing wrong with that, but it is something to be aware of when you engage in this process yourself.


Just ask yourself, what percentage of your decision to go with a given bank is down to pure numbers and how much is a result of the familiar?



Note: The information in this article is provided for entertainment purposes only.

NPL Holdings Limited does not assume any responsibility for giving financial or other professional advice and disclaims any liability arising from the use of the information.

If you require financial or other expert advice you should seek assistance from a professional adviser.