Financial Apathy Is Costing People Thousands

Posted on 1/12/2019  
Financial Apathy Is Costing People Thousands

Financial apathy is costing Australians in higher fees and interest rates, according to comparison website RateCity. It says the reluctance of people to switch banks to get better deals is costing them thousands.

RateCity says the Big Four banks continue to capture the lion’s share of home loans, despite the reality that not one of these lenders have passed on the full reductions to the official interest rate by the Reserve Bank.

“Smaller lenders like Athena and Reduce were the ones to pass on rate cuts in full,” it says. “So why aren't home-owners making the switch?”

RateCity says the habits Australians have towards the banks were, in many cases, formed when they were young.

If you think about your own personal finance, chances are you've been with the same bank since you were a child. You may have even joined through partnered programs at school, such as CommBank's Dollarmites, or St George's former program: Happy Dragon Club.”

Research from consumer group Choice recently identified that 46% of Australians opened their first bank account with CommBank, and 35% of Aussie adults still have this bank account. The Dollarmites club is estimated to be worth nearly $10 billion.

“The issue may not be that Aussies are choosing one bank over another, but that they're not actively looking for more competitive options. Instead, they are most likely remaining apathetic and complacent about their finances.”

This financial apathy can lead to:

  • Paying higher than average home loan rates
  • Paying higher than average fees on their credit card
  • Earning lower than average interest on their term deposit or savings accounts
  • Sticking with a superannuation fund that charges higher than average fees

“While it can seem daunting at first, dedicating a little bit of time to compare financial options could save you money in the long run,” says RateCity.

“Comparison tables can be a really helpful tool to compare apples with apples. If you're thinking about switching to a different home loan provider, for example, these tables can help you filter through loan options to find the one that suits your needs. You can compare interest rates, potential monthly repayment amounts, as well as loan features.

“If you want to get decent savings on your home loan, the simple truth is you may need to break up with your bank, and shop around for a new lender to get them.”

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