A new study undertaken by Queensland University of Technology (QUT) and Heritage Bank has found that Australians could save up to $11.6 billion a year, simply by switching their essential service providers.
The QUT consumer behaviour study showed that whilst 50 per cent of Australians seriously considered switching services such as banking (home loans and credit cards), insurance (car, home and contents) and utilities, only 25 per cent actually followed through with the move.
Australians who took a little time to research different offers and more competitive rates and then switched providers, as a nation, have saved more than $2.5 billion per year over the past five years.
The report also examined the ‘switching habits’ of Australians, which revealed the following reasons why consumers don’t switch providers:
- 37 per cent feel that switching is too much effort
- 36 per cent feel that switching would cost them too much
- 14 per cent feel that they would receive preferential treatment by staying with their current provider
- 13 per cent feel that there is not enough information about switching providers
- 13 per cent also feel that all providers pretty much offer the same rates and conditions.
These reasons are at odds with the results delivered by the same report, which showed that one third of Australians who switched home insurance saved over $300 per year, and 15 per cent of people who shopped at a different supermarket saved around $1000 per year.
In the past five years, the national annual savings from Australians switching suppliers are as follows:
- home loans ($649 million)
- grocery supplier ($593.8 million)
- energy supplier ($393.9 million)
- mobile phone provider ($327 million)
- home and contents insurance ($325 million)
- credit cards ($152.8 million)
- internet provider ($136.5 million).
Interestingly, the report claims that the older a person is, the less likely they are to switch. It also states that men are more likely to switch than women, and city dwellers are more likely to switch than those who live in rural areas.
QUT’s Dr Juliana Silva-Goncalves had this to say about Australia’s switching habits: “It’s interesting to see apathy as the key barrier to switching across such a wide range of industries. 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.”
“The message for the consumer is that if they switch to a different service provider which is more efficient, which provides a service more adequate to their needs at a lower cost, they can save a substantial amount of money,” said Dr Silva-Goncalves.
Heritage Bank’s Jane Calder adds: “It is shocking to discover a huge proportion of the nation believe that switching will actually cost them money when 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.”
I often receive in the mail what I usually perceive as annoying offers of lower or no interest rates on credit card balances, or cheaper electricity costs, or lower bank fees and more competitive rates on insurance. Admittedly, they usually find their way to the bin, typically within minutes.
After reading this report, I may have to start paying more attention to them.
If I am being honest, I probably fall in with the 14 per cent of Australians who feel that they may get some sort of preferential treatment if they stay with thier current provider. I don’t know why. I suppose that’s because there just isn’t enough information around on the cost, benefits and savings that come with taking the chance on another supplier. Or maybe there is. I just keep throwing it out.
The fact that the report has found that the older a person gets, the less likely they are to switch does ring some alarm bells. Older Australians, especially those living on the Age Pension and many of whom are living on or below the poverty line, can scarcely afford to pass up these type of savings.
Now, there could be an argument made for how it is less difficult to switch your credit card provider or utilities over changing your home loan provider. Switching your essential service providers is not as universally simple as this report may imply. But if saving money is a concern for you, then it is at least worth researching to see if you can improve your bottom line.
Always quick with a snappy headline, news.com.au calls this reticence towards switching providers a ‘lazy tax’, which really hits the nail on the head. But if it’s going to save you some big bucks, switching providers may be well worth the effort.
What do you think? Does a report such as this encourage you to put some time into researching better deals from your service provider? Have you switched to a provider that offers a better deal than what you had in the first place? How much did you save? Would you recommend the same action for our members?