How loyalty to our big banks costs us thousands of dollars a year

WE’RE a nation of banking bundlers, according to new research by comparison website Mozo.com.au, and it could be costing each of us thousands of dollars a year.

HALF of Australians do all their banking with just one financial institution, potentially costing themselves big bucks every year.

Misguided loyalty, fear of the unknown and convenience are keeping almost 80 per cent wedded to the Big Four banks, new research by comparison website Mozo.com.au has found, and suggests it’s costing average customers $1600 a year — and some much more.

No single financial institution has a monopoly over the best value loans, savings accounts and credit cards, and Mozo director Kirsty Lamont said there was little reward for being loyal. She said many people felt switching was too much of a hassle but most would be better off “cherry picking” products.

Mozo’s Kirsty Lamont says government regulations help make switching banks painless.

“There’s millions of Australians who could be losing thousands of dollars a year due to uncompetitive interest rates and fees,” she said.

“The switching process for banking has become a lot easier in recent years. In many cases you can do it all online now.”

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Government regulations allow you to contact your existing bank for a list of direct debits and credits, then give it to the new bank, which will contact all suppliers with your new account details. “It’s not really well known. I don’t think the banks promote it because they don’t want us to switch,” Ms Lamont said.

Finance specialist Lisa Montgomery says people are often too loyal to their first ever bank.

Mozo’s analysis of 117 financial institutions found that ME is the nation’s best-value bank, while Westpac is the best value among the Big Four.

Mortgage and consumer finance specialist Lisa Montgomery said some people felt switching would simply mean “more of the same”.

“We don’t prioritise it in our lives as being a thing that will deliver us enough value,” she said.

Ms Montgomery said many people were loyal to the first bank they used, which skewed them towards major banks with school banking programs. Others were loyal to banks their parents used — also benefiting the Big Four, she said.

Before switching, people should examine their existing relationship with their financial institution. “If you leave, will it cost you money, and is the grass greener on the other side?”

@keanemoney