Are you wasting thousands of dollars?

21 September 2015
Spring is a great time to review your finances and if it’s something that you haven’t done for a while then you could potentially be wasting thousands of dollars a year by paying higher insurance premiums, banking fees and interest rate margins.

Many of the financial products we own – from bank accounts to credit cards, home loans, car insurance, home and contents as well as health insurance – are set and forget products. Canstar Blue research has found that while a reasonable number of people are not happy with their financial institution and intend to switch, few actually do it.

Sometimes, of course, you don’t need to switch financial institutions – you just need the knowledge of what else is available, to give you that competitive negotiating edge.


Could you save $6,000?

Canstar has put together some calculations based on a family of four (two adults and two children) that have cards, banks accounts, insurance and a home loan. All calculations are based on the products on Cansatr’s database. Please note that the calculations are indicative only; particualrly in relation to the general insurance products, there are a range of factors that will affect the cost of your specific premium.

  • Some savings possibilities include…

Credit cards

A family with two credit cards containing an ongoing balance of $5,000 per card could potentially save themselves almost $800 per year in fees and interest charges by switching from an average-priced card to a low-rate card.

Here’s an example:

Product Scenario Average % Low % Average fees Low fees Current cost Possible savings
Rewards credit card $5,000 balance 19.39% 11.99% $137 Nil $1,107 $507
Credit card $5,000 balance 12.75% 7.99% $45 Nil $682 $282

Based on the minimum and average interest rate on cards with a rewards program & minimum and average interest rate on cards which have interest rate lower than the market average.


Transaction Accounts

Assuming the family have a couple of transaction accounts each – two they use very frequently and two they don’t use quite as often – there are savings to be made here too.

Here’s an example:

Scenario Average annual fees Low annual fees Possible savings
Two high use transaction accounts $73 Nil $73
Two low use transaction accounts $212 Nil $212

Based on Canstar’s High Transactor  and Low Transactor profiles. Includes account keeping fees and transaction accounts.


Health Insurance

Just under half of all Australians have health insurance, but the cost for equivalent policies can vary greatly.

Canstar has calculated that a family could potentially save themselves more than $1,500 per year by comparing the features and price of policies between providers.

Here’s an example:

Scenario Average annual cost Lowest annual cost surveyed Possible savings
Hospital and Extras with minimum of full cardiac cover $3,387 $1,793 $1,594

Based on Canstar’s Established Family profile. Policies had to be available with full Cardiac cover to be considered.


Car Insurance

The car insurance market is fiercely competitive and a family with a relatively new car (1 year old) and a tried-and-trusted 7 year old car could potentially save several hundred dollars per annum by comparing price and features of their car insurance.

Here’s an example:

Scenario Average annual cost Lowest annual cost surveyed Possible savings
New Car (1 year old) $729 $291 $438
Used Car (7 years old) $592 $289 $303

Based on Canstar’s car insurance profile of Couples age 30-59.



Home and contents insurance

A household with building insurance cover of $500,000 and contents insurance cover of $150,000 could pay more than $1,200 for cover, or less than $600 per annum, depending on the policy they choose.

Here’s an example:

Scenario Average annual cost Lowest annual cost surveyed Possible savings
Building $500,000 and Contents $150,000 $1,228 $540 $688

Based on Canstar’s high sum insured profile including cover for building ($500,000) and contents ($150,000).


Home loan

Your home loan may be the biggest debt you every have, so small differences in interest rate can have a big impact on the cost of your loan.

Here’s an example:

Scenario Average % Average annual cost Low % Low annual cost Possible savings
$400,000 loan 4.82% $27,550 3.97% $25,256 $2,294

Based on a standard variable home loan available for $400,000 and at loan to value ratio of 80%.

Why not set yourself a goal to review each of your financial products, one at a time, to see if you can save money without impacting on the quality of your product.

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