Ditching the big four banks in favour of smaller lenders could save consumers $6.1 billion a year in bank costs, research firm Infochoice says.
InfoChoice chief executive Shaun Cornelius said on Tuesday there was a reluctance among customers to shop around for better deals.
“When looking at the complete cost of banking, including things such as service and transaction fees, ATM fees and interest rates, the major banks come out far more expensive than other, smaller lenders,” Mr Cornelius said.
Infochoice’s quarterly report tracks the average interest and fees charged by the major four banks – Commonwealth, National Australia Bank, Westpac and ANZ.
The report showed that if all major bank customers switched to the lowest-priced products available, they would make an annual saving of $5.4 billion on home loans, $257 million on credit cards and $482 million on other financial lending, including car loans.
“By simply moving to the lowest-priced product in each category, a big four customer could save more than 19 per cent, or $3,800, on their annual banking costs,” he said.
“This would reduce their current average annual banking costs from more than $20,150 to just over $16,300.”
Mr Cornelius said people with home loans and car loans could make the biggest savings.
“Historical data shows that the major banks are increasingly offering rates well above the most competitive market products,” he said.
Infochoice found that despite offering less competitive products, the major banks were increasing their market share.
Record low interest rates had pushed the average cost of banking with the major four banks down by 35 per cent over the past 12 months, Mr Cornelius said.
“Some of the reduction in banking costs with the majors is proof that greater competition in some areas such as low rate, no-frills credit cards can cause a lowering of prices and rates across the board.”