Loyal or lazy? – $11.6b lost by no switch

AAP October 28 2015

http://www.msn.com/en-au/money/personalfinance/loyal-or-lazy-dollar116b-lost-by-no-switch/ar-BBmvtc1

Australians are wasting an estimated $11.6 billion a year by not acting on intentions to switch banks, insurers, supermarkets or utility providers, according to a new study.

National research has found more than 50 per cent of Australians have seriously considered switching, but fewer than 25 per cent act on those intentions.

Savvy switchers who shop around to find the best rates and services have saved more than $2.5 billion per year, so if everyone switched, Australians could save a whopping $11.6 billion per year, according to the report by Queensland University of Technology (QUT) for Heritage Bank.

The study draws on a survey of 1,000 people, and examined the switching habits across a variety of products and services, including home loans, credit cards, home and contents insurance, energy and grocery suppliers, and mobile phone and internet providers.

Almost a third of those surveyed think switching is too much effort, making it the leading barrier to finding the best deal.

Around one in six don’t switch because they think it will cost too much.

But that is contrary to the report, which found people made significant savings by switching.

A third of those who switched home insurance providers saved more than $300; while switching grocery stores saved nearly 15 per cent of those surveyed more than $1000 per year.

Across all sectors, Australians are most likely to switch their energy provider (29 per cent) and least likely to switch credit card provider (17 per cent) and home loan provider (18 per cent).

Customers are far more likely to switch when potential savings are clear.

Nearly 83 per cent said they would switch home loans if they could save around $3000 per year, and around 70 per cent would move mobile phone providers to save at least $150 per year.

Customer service is also essential to satisfaction, with one in five moving banks due to unhelpful staff at their old provider.

“It’s interesting to see apathy as the key barrier to switching across such a wide range of industries,” Juliana Silva-Goncalves from Queensland University of Technology said.

“This belief it’s too hard to switch and too costly, is stopping households from saving thousands of dollars.”

“We expect this trend to change and the amount of people switching to significantly rise over the next year with the expected economic downturn motivating people to shop around and become more savvy.”

Where Australians live and their age group also impacts switching habits and savings.

Those in metropolitan areas are more likely to switch their home loan, credit card, home insurance or energy supplier.

People in rural areas are more likely to switch grocery suppliers and on average save more if they do choose to switch their home loan.

Heritage Bank executive Jane Calder says it’s shocking to discover a huge proportion of the nation believes switching will actually cost them money.

“In reality, our report shows people who shop around for the best rates and deals have already saved a massive $2.5 billion per year.”

The report was conducted by Queensland University of Technology on behalf of Heritage Bank on a sample of 1000 Australians in August 2015.

How much you could save by switching

* Home loan – $1130 per customer, per year

* Credit card – $186

* Home and contents insurance – $190

* Energy supplier – $149

* Grocery store – $296

* Internet provider – $81

* Mobile phone provider – $88

Source: Queensland University of Technology