Commission Refunds with Credit Cards

Credit cards are one of the most convenient financial tools a consumer can possess. They are convenient; more secure than cheques; eliminate the need to carry large amounts of cash and, can be used anywhere around the world.
Consumers who use certain credit cards are also eligible for frequent flyer points, reward schemes, gifts and other types of incentives which aim to encourage the continued use of a credit card to make purchases. There is also a grace period of anywhere between 20 to 50 days to pay the balance of the accountin full. In other words, 20 to 50 days of free money!
However, the down side of credit cards is that if the consumer does not pay off the balance in full by the due date, hefty interest rates are imposed on the outstanding amount.
The consumer may not be aware that the nominal interest rate, of say, 12% p.a. may default to a higher rate of, 20% (for example), if they miss a payment. The consumer is then charged the full interest rate on the entire outstanding amount, which also includes any new subsequent purchases made using the same credit card.
The end result is that the consumer can become financially strangled by the ever-increasing interest debt and in some cases this can lead to bankruptcy.
But, here is something interesting, the average consumer who uses a credit card also has some type of investment portfolio – whether it is a managed fund, pension/superannuation scheme, life insurance or unit trust.These funds pay an ongoing trailing commission to a third party, namely a financial adviser.
The financial adviser is being paid a trailing commission because in theory he/she is supposed to keep the investor regularly up to date on their investment portfolio and give ongoing financial advice about the investment. But, what happens if the financial adviser has not had any meaningful contact with the investor except for the one and only time they met to sign up for the investment scheme?
The truth is, the financial adviser keeps receiving the commission for the entire duration of the investment and, the consumer/investor gets absolutely zero value out of the deal! Furthermore, every bit of commission paid out to the adviser comes out of the investor’s account.
Imagine if you could retrieve these commissions and redirect them to your credit card account for the purpose of reducing your interest debt. It is estimated that there is about $2.4billion of trailing commissions generated annually in Australia. This is about $1200 per head of population! Wouldn’t it be put to better use if it could be redirected to help consumers reduce their creditcard debt?
Unfortunately, these trailing commissions cannot be switched off or paid directly to the client’s account by the funds. But there is a way, a very simple and efficient way, which will allow the credit card holder/investor to redirect these commissions into their credit card accounts.
There is a new wave of privately owned companies, operating under their own Australian Financial Services Licence (AFSL), who will retrieve the trailing commissions and redirect them to an account nominated by the investor, such as a credit card account. All the investor has to do is change the Adviser Code on their managed fund, pension / superannuation fund, unit trust, life insurance etc. Some of these companies will charge as little as $240p.a. and rebate 100% of all the trailing commissions back to the client.
There is one particular private AFSL company that will also allow you to link other people to the nominated account, for example, parents, grandparents, child, spouse, defacto spouse, brother or sister. Your relatives can then help you reduce your debt much quicker because trailing commissions from their investment funds can be aggregated to generate more reward credits for your account.
All investors and consumers who are eligible for such rebates would be wise to go online and research some of these companies. The opportunities are there to make it easier for consumers to reduce some, if not all, of their credit card debt.

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Editor's Choice: Commission Rebate Service

Service	Details	Value of Rebate	Fees	Refund to You
iRefund Commission Refunds	The iRefund commission collection and refund service is a no-cost service. That is, iRefund will always be paying you, our members, the fees and commissions that we collect on your behalf. .	First $790	$395 (50%)	$395 (50%)
		Amount in excess of $790	$0 (0%)	$395+ (100%)
MyMoney Commission Refunds	Get all your trailing commissions rebated to you. There are no upfront fees charged, an annual fee is paid to MyMoney from the commissions refunded. There is no joining fee or member fee. So the service is free to you.	First $480	$240 (50%)	$240 (50%)
		Amount in excess of $480	$0 (0%)	$480+ (100%)

Example of the potential refund

Value of Investments	Average Rate	Commission	Annual Refund
$50,000	0.4%	$200.00	$100.00
$100,000	0.4%	$400.00	$200.00
$150,000	0.4%	$600.00	$360.00
$300,000	0.4%	$1,200.00	$960.00

Note: Commission rates will vary between investments and this table excludes any initial commissions or commissions on continuing contributions to your superannuation funds or other savings plans.