43% of older Aussies haven’t switched banks this decade
According to recent research from St.George, many older Australians are sticking with their banks for a decade or more - but that loyalty could be costing them.
St.George has found that a massive 43% of Aussies over 50 haven’t switched banks in over a decade, while 18% had never switched banks at all.
But that kind of loyalty may not be a good thing, and could mean seniors aren’t accessing some of the best financial products on the market.
“It’s interesting to see such a large number of respondents have not changed banks in some time. Just as you would regularly review your phone or electricity providers, I recommend you do a financial health check with your bank to ensure you’re happy with the service provided,” said Ross Miller, General Manager of St.George Retail Bank.
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The St.George study also found that savings account interest rates top seniors priorities when choosing a bank, followed by home loan rates, then service, and finally, having a physical bank branch nearby.
In fact, 50% of older Aussies prefer to do their banking online rather than in a branch - which is good news, considering that Mozo consistently finds that online and challenger banks offer some of the best value products around.
For example, according to Mozo’s savings calculator, seniors with a rainy day fund of $20,000 could net an extra $246 in interest each year, just by jumping ship from a savings account with the average interest rate of 1.85%, to an account like ME’s Online Savings Account, which has an ongoing bonus interest rate of 3.05%.
And thanks to banking reforms from 2012, switching banks is much easier than some people might realise. Once savers find a new account, they can request that their new bank do much of the heavy lifting as far as switching goes, including contacting their old provider and helping to move direct debits and credit across to the new account.
Things to remember when switching banks
- Although your new bank can request a list of your direct debits and credits from the past 13 months from your old provider, this won’t include BPAY payments, recurring payments that are linked to your debit card, or ‘Pay anyone' payments. So be sure to switch these other payments over to your new account yourself.
- It can be a good idea to leave some money in your old account for a few months, in order to cover any payments you might have forgotten and avoid dishonesty fees.
- Having said that - when you’re sure you’ve got all your bills sorted out, make sure you do close the old account, so you aren’t paying unnecessary account fees. Keep in mind, you may have to go into a branch to do so.
- When switching savings or bank accounts, there are no exit fees to worry about. But if you’re refinancing a home loan, things can be a little more complicated. Lenders aren’t allowed to charge exit fees on mortgages taken out after July 2011, but if you have a fixed rate mortgage, you may need to take into account early exit fees, and if your loan amount is more than 80% of your property’s value, you may need to pay LMI again.