Simple switch could put $800 back in Australians' pockets each year
- Replies 5
Minor oversights can quietly add up in personal finance, particularly for older Australians who want to make the most of their savings.
A recent report has drawn attention to a surprisingly common slip that may quietly impact finances more than expected.
It's a reminder that even the most minor habits can have long-term consequences.
According to new data from the financial comparison site Mozo, many Australians inadvertently give up hundreds of dollars in potential interest earnings by not managing their bank accounts effectively.
The research indicates that by simply choosing the wrong type of bank account, Australians with a balance of $25,000 could be missing out on over $800 a year in interest.
Mozo's money expert, Rachel Wastell, points out that a few simple oversights are to blame for this loss in potential earnings.
'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,' she said.
One of the key mistakes identified is the tendency to place money into a transaction bank account rather than a specialised savings account.
Transaction accounts are designed for everyday use and typically offer little to no interest. Mozo's research found that 67 per cent of these accounts pay no interest at all, while only 9 per cent offer more than a paltry 0.10 per cent.
Furthermore, the study revealed that nearly half of Australians do not know the interest rate on their savings, and 20 per cent fail to meet the criteria necessary to earn bonus interest rates.
'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,' Ms Wastell added.
This lack of awareness and engagement with their financial products means many are unknowingly sabotaging their own financial growth.
Another factor contributing to this issue is misplaced loyalty. Mozo warned that Australians often stick with the big four banks out of habit or convenience, despite these institutions being unlikely to offer the best savings rates.
'Banks don’t reward loyalty—they bank on complacency,' Ms Wastell explained.
'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 data suggested that those who actively switch to non-big four banks tend to secure higher interest rates on average.
This is a clear call to action for savers to shop around and consider alternative financial institutions that may offer more competitive rates.
So, what can you do to avoid falling into this trap and ensure your savings are working as hard as they can for you?
To make the most of your savings, regularly review your account interest rates and consider switching if they’re too low.
Comparison websites can help you find better options, especially from smaller or online-only banks.
Pay attention to any conditions required to earn the highest rates, such as minimum deposits or monthly transactions.
Stay updated on market changes, as switching accounts can often lead to better returns.
High-interest savings accounts with bonus or introductory rates can offer a boost, but be mindful of changes after the initial period.
By taking these steps, you can take control of your savings and potentially add hundreds of dollars to your bank account each year.
It's a simple switch that could make a big difference over time, especially as you plan for a financially secure future.
Have you recently switched bank accounts to get a better interest rate? What was your experience like? Share your stories in the comments below, and let's help each other make the most of our hard-earned savings.
A recent report has drawn attention to a surprisingly common slip that may quietly impact finances more than expected.
It's a reminder that even the most minor habits can have long-term consequences.
According to new data from the financial comparison site Mozo, many Australians inadvertently give up hundreds of dollars in potential interest earnings by not managing their bank accounts effectively.
The research indicates that by simply choosing the wrong type of bank account, Australians with a balance of $25,000 could be missing out on over $800 a year in interest.
Many Australians are missing extra interest due to simple banking mistakes like choosing the wrong account type. Credit: Pixabay
Mozo's money expert, Rachel Wastell, points out that a few simple oversights are to blame for this loss in potential earnings.
'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,' she said.
One of the key mistakes identified is the tendency to place money into a transaction bank account rather than a specialised savings account.
Transaction accounts are designed for everyday use and typically offer little to no interest. Mozo's research found that 67 per cent of these accounts pay no interest at all, while only 9 per cent offer more than a paltry 0.10 per cent.
Furthermore, the study revealed that nearly half of Australians do not know the interest rate on their savings, and 20 per cent fail to meet the criteria necessary to earn bonus interest rates.
'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,' Ms Wastell added.
This lack of awareness and engagement with their financial products means many are unknowingly sabotaging their own financial growth.
Another factor contributing to this issue is misplaced loyalty. Mozo warned that Australians often stick with the big four banks out of habit or convenience, despite these institutions being unlikely to offer the best savings rates.
'Banks don’t reward loyalty—they bank on complacency,' Ms Wastell explained.
'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 data suggested that those who actively switch to non-big four banks tend to secure higher interest rates on average.
This is a clear call to action for savers to shop around and consider alternative financial institutions that may offer more competitive rates.
So, what can you do to avoid falling into this trap and ensure your savings are working as hard as they can for you?
To make the most of your savings, regularly review your account interest rates and consider switching if they’re too low.
Comparison websites can help you find better options, especially from smaller or online-only banks.
Pay attention to any conditions required to earn the highest rates, such as minimum deposits or monthly transactions.
Stay updated on market changes, as switching accounts can often lead to better returns.
High-interest savings accounts with bonus or introductory rates can offer a boost, but be mindful of changes after the initial period.
By taking these steps, you can take control of your savings and potentially add hundreds of dollars to your bank account each year.
It's a simple switch that could make a big difference over time, especially as you plan for a financially secure future.
.png){kind=icon}
