# Are you wasting thousands of dollars?

JUSTINE DAVIES
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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