Comparison rate - I've had three mortgages and numerous personal loans. What numbskull wouldn't factor in associated loan costs when borrowing and totally rely on the raw interest rate? Another invented term for the mental dipshits of this world.
How comparison rates are calculated is probably the most moronic thing of all
For example - if you are on a Standard Fixed loan for 3 years at 4% which then rolls to a Standard Variable rate with a DISCOUNT of -1.5% - the comparison rate is calculated using the Standard Variable rate WITHOUT the discount being applied
Example -
Fixed rate 4%
STD VAR rate = 5.5%
Discounted Standard Variable rate 4%
If you have 4% for 3 years and 4% for 27 years (ignoring fees) the comparison rate would be 4%
Yet look at the advertised rates and they're represented as 5.37%
Utter madness
Then they continue the stupid with fees calculations by using $150,000 as the comparison amount when calculating interest
A fee of say $350 per annum, which often covers credit card fees and bank account fees as well as rate discounts on loans of say $600,000 plus is used on $150,000 amount for calculation purposes
A fee of $350 has a far bigger effect on a comparison rate when using a small loan balance as the reference, than it does on a larger amount.
People should look at their loan products, fees, charges etc as a whole of their financial package requirement. If you have a large loan, look at packages which wrap up a bundle of options for one fee but offers the bigger discounts and provides things such as reward points or travel insurance if you go overseas etc
If you have a small loan and rarely use a credit card, then basic no frills stuff with no fees may suit you better. It's hardly rocket science
