Australians could save more than $11.6 billion by switching providers
Article by Kirsty Timsans
Australians are losing an estimated $11.6 billion a year by not switching their banking, insurance, grocery and utilities providers, according to a new consumer behaviour study.
The research, conducted by Queensland University of Technology on behalf of Heritage Bank, examined the switching habits of Australians across a variety of bank and service providers including credit cards, home loans and energy suppliers and found that while 50% of the population have considered switching less than a quarter have followed through on these intentions.
According to the national study, Australians are far more likely to switch their energy provider (29%) relative to their credit card (17%) and home loan (18%).
Customers who shopped around to find the best rates and services were found to have saved collectively more than $2.5 billion per year, however the report found strong barriers to switching. For instance almost a third of Australians believed switching providers is too much effort, while 1 in 6 said they don’t switch because they think it will cost too much.
“The belief it’s too hard to switch and too costly, is stopping households from saving thousands of dollars,” said Dr Juliana Silva-Goncalves from the Queensland University of Technology.
“We expect this trend to change and the amount of people switching to significantly rise over the next year with the expected economic downturn motivating people to shop around and become more savvy.”
Credit cardholders may be especially encouraged to shop around for a better rate given Money Smart’s figures that the average Australian cardholders has around $4300 worth of debt and pays around $700 in interest per year if their interest rate is between 15% and 20%.
The research by the Queensland University of Technology also found that where Australians live impacted their switching habits. For instance, people living in metropolitan areas are more likely to switch their home loan, credit card, insurance and energy provider compared to those living in rural areas.
Customer service was also revealed to be an important factor in determining switching habits with 1 in 5 Australians moving banks due to unhelpful staff at their old provider.
Are you thinking about switching credit card providers? Use our Switch and Save calculator to search for a competitive rate and save on your monthly repayments.