RBA rate cut: Aussies warned over costly banking ‘blind spot’

Most Aussies don’t know this about their money – and the silent banking trap could be costing them a hefty sum in lost earnings.

They’ve just been delivered an interest-rate cut but many Aussies won’t reap the benefits because of growing financial complacency that’s left most people stuck with banks that give them a lacklustre deal.

Alarming polling revealed most borrowers didn’t know what interest rates they were paying on their loans, indicating they were not up to speed on whether they were getting a good deal.

The majority of Aussie adults were also banking with the same account they joined as children – even when higher interest earning options were available.

It comes as the Reserve Bank of Australia announced another 0.25 per cent cut to the cash rate on Tuesday, a move that the big four banks have since announced they will pass to borrowers and savers in full.

The official cash rate has now dropped from 4.1 per cent to 3.85 per cent.

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Personal finance expert Sarah Megginson said many Aussies thought changing banks was more hassle than it actually is. Picture: Michelle Swan.

The Finder survey laid bare the costly reality of banking complacency, revealing 51 per cent of Aussie adults polled were still using their first bank account as their primary repository for savings.

That loyalty is now costing cold, hard cash.

Finder personal finance expert Sarah Megginson said Aussies’ loyalty to their childhood banks was being rewarded with subpar interest rates and a financial kick in the teeth.

“You might think your existing bank is ‘good enough’, but if you’re not earning interest, it’s your bank balance that is missing out,” Ms Megginson said.

Such banking inertia wasn’t simply hurting savings.

A shocking number of homeowners admitted they didn’t even know what interest rate they were paying on their mortgages – their single biggest household expense.

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Half of Aussies banked with the same accounts they opened as teens. Picture: Rohan Kelly.

An additional Finder survey found just 37 per cent of mortgage holders could name their interest rate.

This suggested up to 63 per cent of homeowners were paying off home loans without knowing how much they were paying in interest – potentially costing families thousands in missed refinancing opportunities.

Ms Megginson warned that blindly trusting your bank to pass on rate savings was a mistake.

“Mortgage repayments are often a family’s biggest monthly expense, and not knowing your rate is like driving blind on your financial journey,” she said.

“Knowing your rate is absolutely crucial. There’s money on the table to be saved by renegotiating with your lender or shopping around for a better deal, and that starts with knowing your rate.”

A significant amount of homeowners don’t know what interest rate they are paying on their homes. Picture: NCA NewsWire/ Gaye Gerard

There was something of a gender divide when it came to rates: 30 per cent of female mortgage holders knew their interest rate, compared to 45 per cent of men.

There was also a divide, albeit smaller, when it came to banking loyalty to savings accounts opened as teens. About 55 per cent of women continued to bank with their first account, compared to 47 per cent of men.

“Many people stick with the same bank for years, as the idea of switching seems like a massive hassle,” Ms Megginson said. “It’s really a lot quicker and more straightforward than you think.”

Originally published as RBA rate cut: Aussies warned over costly banking ‘blind spot’