Millions of Australians could be missing out on hundreds of dollars in interest payments annually due to simple savings mistakes and banking errors, a recent report reveals.
According to new data from Mozo, a significant number of Australians are unknowingly losing out on extra earnings because of simple savings mistakes when selecting their bank accounts. These errors often include choosing the wrong type of account or failing to meet the criteria for bonus interest rates.
The issue is far more widespread than many realize, and the News has highlighted that millions of dollars in potential interest are being missed collectively due to these overlooked mistakes.
Understanding the Mistake
The research shows that Australians with a balance of $25,000 could be missing out on $800 each year by simply not choosing the right type of savings account. One of the most common savings mistakes is depositing savings into a transaction account, which offers little to no interest.
In fact, 67% of these transaction accounts pay no interest at all, and only 9% offer more than 0.10% interest.
Mozo’s money expert Rachel Wastell highlights that many Australians are not taking the necessary steps to optimize their savings.
Savers may assume their savings are safe or earning high interest, but our research reveals a lack of awareness that means many could be unknowingly sabotaging their own returns – Wastell stated.
The Risks of Bank Loyalty
Another factor contributing to this issue is Australians’ loyalty to the big four banks. These major financial institutions tend not to offer the best savings rates, meaning customers who stay with them could be making costly savings mistakes. As Wastell explains,
Banks don’t reward loyalty – they bank on complacency. So if you’ve parked your savings in your bank account and forgotten about it, or have a low savings rate, chances are you’re losing out on potential interest.
The report also highlights that nearly 50% of Australians do not know their current savings rate, and 20% are not meeting the criteria for receiving bonus interest rates.
There’s likely millions of dollars in lost interest Australians are collectively missing out on just because they haven’t taken five minutes to check their rate or their savings account conditions – Ms. Wastell adds.
The data shows that those who switch to non-major banks often benefit from higher interest rates. In fact, those who make the switch generally earn better returns. As Wastell notes,
The data shows that those who switch have higher rates on average, particularly those who switch to non-big four banks.
