You may have missed out on an end of financial year bonus at work, but take a close look at your everyday financial products to give your hip pocket a valuable boost.
Comparison site Mozo reckons the average Australian could save over $3,000 by switching to banking products offering better value. Here’s how it works.
Let’s start with your everyday account. Despite a selection of more than 40 transaction accounts that charge zero monthly account fees, some of us are still paying around $5 each month for everyday banking. That’s $60 annually going to waste. Switching to a cheaper account is easy – your new financial institution will help to transfer regular direct debits and credits over to the new account.
Next, take a look at your credit card statement to see what the card is costing you. According to Mozo, run of the mill cards are charging around 17.58% interest with an average annual fee of $110. The thing is, on the average card balance of $4,538 you could save $390 annually by switching to a low rate card charging 8.99%.
Moving onto your home loan, this is one area where there’s no room for complacency. Reserve Bank figures show the average standard variable rate among our banks is currently 5.45% – the lowest since 1968. But you could do much better. By switching a $300,000 25-year home loan from the average rate of 5.45% to one charging 4.2% you could pocket monthly savings of $217, potentially leaving you $2,604 better off over the next 12 months.
Returns on savings accounts have hit a low patch with the average rate being around 2.35% at present. If you’re prepared to meet certain conditions, like depositing a minimum amount into your account each month, it’s possible to ramp up the return to 3.5%. On a $10,000 balance that could add an extra $125 to your annual interest income.
Sure, all these steps involve a bit of effort. The pay-off is more money in your hands, and this can mean extra cash to pay down debt, grow your super, or start building an investment portfolio.
The bottom line is that it doesn’t pay to take a ‘set and forget’ approach to our main financial products. Make it an annual habit to review the products you’re using and keep the savings rolling in each year.