New Mozo Report Urges Aussies to Break Free from 'Stockholm Savings Syndrome’

69% of Aussies have never switched savings accounts, but the data shows those who do have more savings and higher rates

22 April 2024

piggy bank in jail to represent stockholm savings syndrome

Leading financial comparison site is urging Australians to rescue their savings and escape ‘Stockholm Savings Syndrome’ with the release of its latest report SOS: Save Our Savings.

As consumers navigate a “higher-for-longer” interest rate environment, Mozo's latest report sheds light on the state of Aussie savings, uncovering shocking insights and urging savers to compare rates to get the best return possible.

The report draws on extensive analysis of 232 savings products and reveals millions of Aussies could be missing out on higher rates due to laziness and loyalty.

"69% of Aussies have never switched savings accounts, despite earning less interest than those who do,” says Rachel Wastell, Mozo's personal finance expert.

“It's like we've all got Stockholm Savings Syndrome. Aussies are not switching savings accounts because it’s too much effort, or they are switching but for convenience, not higher rates.”

Mozo research highlights the urgent need for Australians to reassess their reasons for choosing savings providers, and consider switching to accounts offering higher interest rates to maximise the return on their hard-earned cash. 

Holidays Outpace Emergency Funds As Aussies’ Top Savings Goal

“The cost of living is rising, and in response 1 in 6 Aussies are putting their savings goals on hold," emphasises Wastell. "However, for those who can afford to stash their cash, priorities are split between luxury and necessity."

Mozo research shows that more than 1 in 3 (39%) Aussies are diligently building an emergency fund, but holidays outpace emergency funds as the top priority, with close to half (42%) of Aussies saving for holidays. Other savings goals high on the priority list include new cars, home renos, and energy efficient home upgrades.

When it comes to setting savings goals, 1 in 4 Aussies successfully set them but success varies across generations. Gen Z (42%) and Millennials (41%) struggle the most to achieve goals, despite being most likely to set them. The older generations, 31% of Boomers II (59-68) and 44% of Boomers I (69-77), are more focused on saving for a rainy day. They are also most likely to have given up on setting savings goals after failing at past attempts at achieving them .

75% Of Aussies Have Less Than Three Months Expenses

Mozo found a whopping 75% of Aussies have less than $15,000 in savings, which according to Expatistan data is roughly three months of expenses. 

“It’s recommended that you have three months of expenses in savings for emergencies, but 3 in 4 Aussie savers have well below that,” stresses Wastell.

Mozo research shows the average savings amount is $22,586, but 19% of the population are dragging that average up, as the median savings amount is just $2,000. Shockingly, 1 in 3 (30%) have less than $500 stashed away. 

“If you are one of those Aussies who can afford to stash your cash, checking you have the highest rate for your circumstances is the only way to make sure you’re getting the best return.”

Aussies Can Rescue Their Savings By Switching To A Higher Rate

"Mozo data shows Aussies who switched savings accounts in the past 12 months boasted rates roughly 1% higher, and had an average balance more than $10,000 more than those who’ve stayed loyal to the same savings provider,” Wastell says.

The cohort of Aussies with the lowest savings rate hadn’t switched because it’s “too much effort” while those with the second lowest rate had switched savings providers, but did so for the purpose of “more convenience / to have all my accounts in one place”.

“Switching for convenience is not likely to get you the best return, as full-service banks often have lower rates than specialist providers. Savers should look for a high rate first and foremost if they want to make their money count for more.”

Mozo’s SOS: Save our Savings report was compiled as part of the Mozo Experts Choice Awards 2024, where experts found the winners of the High Interest Savings category offered rates close to 2% higher than the Big Four average.

“83% of the Mozo Experts Choice Award winners were challenger banks, offering Aussie savers close to 2% higher rates than those offered by the Big Four banks”

“Bendigo, Macquarie, Bank of Queensland and AMP are a few of the challenger banks that can help savers get a better return on their hard earned cash.”

“Aussies can rescue their savings by actively comparing providers and seeking out high interest accounts as a top priority, rather than putting up with lower rates.”

Notes: commissioned a nationally representative consumer research survey via Researchify, surveying 2,554 Australians, aged 18 years and over, from 12th January to 2nd February 2024.