Aussies losing billions to ‘lazy tax’

Australians who are sticking with current service providers could be losing big bucks.

Aussies losing billions to ‘lazy tax’

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.”

Read more at www.heritage.com.au
Read the full report here

Opinion: Is it time for you to switch?

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?





    COMMENTS

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    MICK
    15th Oct 2015
    10:07am
    I have to admit that electricity is my Achilles Heel. I should move away from Energy Australia but being busy is my excuse for letting this coal owned leech continue to cannibalise us. One day!
    shirboy
    15th Oct 2015
    10:23am
    Mick try AGL I have stayed with them for a few years. Also I pay fortnightly .
    FrankC
    15th Oct 2015
    11:28am
    Mick, I have been with Lumo since they took over SEQEB in 2009, (I think it was ) and have been happy with them. They also allow you to pay a fortnightly amount or monthly into your account, give you the pensioner rebate of 79.9 cents/day against service charge , plus approximately 11.3% off (Early bird' payment) if you pay before a certain time. Costs: 0.294 cents kW, and 0.554 cent service to property charge, inclusive of GST. They are a Victorian company, and I live in Qld.
    Adrianus
    15th Oct 2015
    1:07pm
    mick, you said you were switching a month ago!
    If you live in QLD or SA you can get a solar system installed with no out of pocket expenses. You will only notice the 30% drop in your power bill. Oh, and the panels on the roof.
    Stop making excuses! Tell Getup you need some time off to get it together!
    Charlie
    15th Oct 2015
    11:19am
    Switching services often requires quite a bit of research, so a person would need to have internet access and good skills with it, just to see what all the options are. Also when working full time there are not a lot of spare hours to look into things that may, or may not provide some financial gain. When I was working, my head was so full of information overload I just couldn't give anymore. Furthermore it seems that all parts of Australia are not equal in terms of the services that are available. The electricity suppliers in North Queensland where I live seem to be Ergon, Ergon, or Ergon.
    GoldenOldie
    15th Oct 2015
    4:53pm
    Spot on Charlie. In regional NSW we don't get the choices they do in Sydney. Have tried comparison sites which inevitably leads to lots of pestering emails and phone calls. Even with the help of such sites it is still a complex and ever-changing playing field, sown with plenty of landmines for the unwary! I did manage to get our existing electricity provider to match a competitor's offer - why can't they offer better discounts without us pressuring them into it, I ask!
    Cheezil61
    15th Oct 2015
    6:25pm
    Agree EXACTLY Charlie! It should be made easier to compare - I do not trust the websites that offer to compare options as they are possibly paid (in whatever way shape or form that takes) to favour certain companies over others. Meaning have to do OWN time consuming research to get the honest answers/solutions to save money!
    Sevi
    15th Oct 2015
    11:30am
    Same old story for us here in WA, no alternative to Synergy as the other one only deals with Commercial business
    Horizon
    15th Oct 2015
    11:35am
    What the lady from the bank doesn't understand is that not all banks will just grant you a new home loan without a lot of hassle
    and as for bank helping small business - don't make me laugh
    As soon as you change phone / electricity companies, every other company rings you and wastes your time
    Believer
    15th Oct 2015
    11:48am
    The trouble with switching is remembering and telling everyone when it comes to passwords and people!
    Adrianus
    15th Oct 2015
    12:09pm
    It is interesting that "14 per cent feel that they would receive preferential treatment by staying with their current provider."
    Years ago this 14% would have been much much higher. There is no loyalty today. Sure there are such things as loyalty rewards clubs etc, but these are just schemes to modify your behaviour, learn more about your buying habits, and handcuff you.
    When it comes to loyalty they could learn a few things from the Fallick's old friend Monty. Or my old girl Martini.
    Rae
    15th Oct 2015
    3:34pm
    Yes I change insurance provider each year. I know I pay the salesperson a fee but I also manage to save hundreds. Companies have no loyalty anymore so why should the consumer.
    KSS
    15th Oct 2015
    12:50pm
    There are currently 8 responses to this article (6 comments and 2 relies). Of the 6 comments 5 could be viewed as paying the 'lazy tax' given they are trotting out the same excuses as the survey showed and the sixth does the same with the addition of the 'fact' there is only one electricity provider in their area.

    So it seems if you think you are paying too much, you probably are and its your fault!
    Kaz
    15th Oct 2015
    12:53pm
    I switched insurance companies and get the same, if not better attention for less. When I first changed, the old provider told me if I had followed them up, they would have given me a better deal! I thought after being with them for 20 years, they would have offered me a better deal in the first place!
    Trish
    15th Oct 2015
    12:53pm
    Several years ago I succumed to repeated invitations to switch from Telstra to another provider. Was told how much I would save, etc. The wonderful promises didn't materialise (of course), the billing was atrocious, very confusing, and no comparison was possible. I decided to get back to Telstra, but what a performance THAT was. Took 3 months before back to 'normal'. Shortly after, the other provider went bankrupt! I considered I had a lucky escape, and am very wary of changing any provider again.
    Supernan
    15th Oct 2015
    1:03pm
    Recently we did something simple. Asked for a new Tel number. Were getting nuisance calls - friend of a friend of my . Telco couldn't trace him, so a number change. Took 3 weeks to could get them to do it. Kept saying they'd pass message on & call back !

    Finally they switched it. Guess what ? We had no landline at all for a week. Took 2 days before they'd talk about this & insisted it was a line fault ! Sent out Telstra techies costing us $160 ! They said it wasnt the line, just a switching error !

    While we had no landline, had to rely on Mobile. Reception here is lousy ! Especially talking to very nice people with Indian accents. By the time it was sorted, was so stressed out ! No wonder we dont make changes !
    particolor
    15th Oct 2015
    1:43pm
    EXACTLY ! :-(
    ace
    15th Oct 2015
    2:21pm
    I am a bit of both I have switched some , but some I have kept because I thought It was safer.
    I recently tried a switch option only to find that they had a Bad Rep & were not that cheaper so got a new deal from my old Energy supplier. Health if I switch I lose some long term benefits? Car did switch & was not happy with repair . Next one would not transfer Max discount when I got another car ? Bank I switched from Westpac to St George & they bought it !! still St George Credit card is ok
    buby
    18th Oct 2015
    10:26am
    I bet your not aware Ace that Westpac, own St. George lol!

    15th Oct 2015
    2:37pm
    It is a good idea to compare prices/charges periodically (every two or three years) with not only your electricity supplier, but also with your insurance companies, phone/IT provider, and anyone else you pay for a service on a term basis. Apathy is one of the biggest factors contributing to a lot of company profits.
    LiveItUp
    15th Oct 2015
    2:54pm
    I treat every bill that comes as an invitation to renew not to just pay them. Obviously some bills are non negotiable like the car rego but with all the others I do some research and then ring the company and ask for a better deal. If I can get a better deal elsewhere after phoning the current provider I just switch. Numerous times I have seen that companies have no loyalty to me so why should I have any loyalty to them.
    Adrianus
    15th Oct 2015
    6:11pm
    Bonny I remember when I had a home loan. Been with the bank for 20 years. When I went into the branch one day I saw a sign promoting a home loan with a rate far below my rate. I asked the manager if I could have one of those loans? He replied "they are only for new customers."
    Earlier in the year a young man knocked on my door selling introductory offers for Foxtel at $25 per month. I replied sign me up ! Again, when he found out that I was already a member and paying $100 monthly he said I cant have it.
    As Leon says, it's best to keep on the move so that you are always a new customer these days.
    LiveItUp
    15th Oct 2015
    8:41pm
    Agree customer loyalty no longer counts for much and in some cases old customers are actually asked to pay more.

    My health fund had a bonus for new customers so I asked them could I have it too. They said no but decided to give it to me when I said that I was going else where. Same thing happened with my electricity company. Insurance company had cheaper rates online so I asked and got the lower rate as well. So from my experience all one has to do is ask.

    I was in a bank the other day and I had more funds than usual in my account and they wanted to know what I was going to do with it. When I said that I was waiting for the right opportunity to invest it they asked if they could help. I said no thank you so they asked me again. I then said that they couldn't help me as I was waiting for a better time to invest. I then got it's the time in the market that counts etc to which I replied that it wasn't the time for me to be in the market but I'd let them know when it was. One could only imagine what would have been the outcome if I was not financial savvy.
    rogerh
    15th Oct 2015
    3:15pm
    I looked into changing electricity and gas providers; I was contacted by Electricity Wizard who recommended I change from Lumo to Momentum Energy. Their calculations showed that I would save about $120 on my power bill.

    When I advised Lumo of my decision to change; they did the calculation of my bill using Momentum Energy figures and came up with a very similar cost to what they charged me. I tried to contact the consultant at Energy Wizard to ask her what was going on; despite several messages being left, she did not contact me.

    As a consequence of this exercise, I have remained with Lumo, who also credited my account with $50 for staying with them.

    Therefore, I am of the opinion that there does not appear to be much difference in the bottom line balance between what the companies charge you.
    Ageing but not getting old
    15th Oct 2015
    4:08pm
    Living in W.A. I have no choice in Electricity provider. We have two choices now in Gas, but my current bill is less than $30 per quarter, so the meagre savings I'd receive are not worth the effort. No home loan; No insurance policies of any kind, changed telecommunication providers last October & have one more year on the plan; will look and see what's available then; need to change credit cards for sure, am looking, but can't change for a little while yet.
    niemakawa
    15th Oct 2015
    5:45pm
    Switching is one thing, but once done how many people keep tabs on all service providers after that, probably not many. I know it is a cliche, but sometimes is is "better the devil you know..."
    Cheezil61
    15th Oct 2015
    6:20pm
    For me it is VERY time consuming (& I do not have sufficient time to do the things I WANT to do as it is now with working full time shift work & trying to fit family & exercise into the equation is already difficult without adding spending the necessary required excessive time researching bills) -Also, like many, I cannot afford to be jumping out of the frying pan & into the fire & end up getting ripped off by the many enterprising/dubious telemarketers who are on the phone to me constantly wanting me to change to their company!
    Another problem is that all of our circumstances are individual so what is good for someone else isn't necessarily better or cheaper for us, so without the research it could mean wasting MORE money!
    Billyboy
    15th Oct 2015
    8:03pm
    My experience is that all of the history counts for nil when you are seeking service.
    With banks you get a better deal with the bank over the road than you do with your "man & boy' history. They count on your reluctance to change. your "friendly bank manager" has been long extinct.
    With my Motor vehicle insurer I tried to get a cheaper premium because of less usage. No way, but if I went online & purchased a new policy it was $200 cheaper. I could not get through that, as a long standing customer, I deserved a cheaper rate than a new on-line customer. They said it was administration but what could be easier than sending a rewewal and receiving payment? They were not interested in further discussion.
    They don't understand that it is more expensive to chase and set up a new customer -their long standing and faithful customers are the best and cheapest.
    Twice many years ago I tried swapping to other telcos for phone & internet and it was a futile and painful exercise. In getting it back in order with Telstra I felt that I had to do penance and only got satisfaction by going to the ombudsman.
    MJM
    16th Oct 2015
    6:03am
    Over the past ten years I have paid no interest in my credit cards... Balance transfers up to 24 months has saved me so much cash. I tell everyone I can and no one has made the effort. Some pay up to 18% !!! You must be strong tho cutting the card as soon as you get it work out the amount from day one by dividing what you owe by the months free as soon as it's paid call and cancel the card if you haven't repaid by the end of time arrange another transfer with another bank at least a month before first one ends! This will only work for people who have some form of financial commitment. Which I don't see a lot.
    fletch
    16th Oct 2015
    8:02am
    Supernan,
    Change of Telstra home phone number is a nil charge.I had the same problem [nuisance calls from a woman,who I hate].The staff gave me a list of vacant numbers and I choose one.I also told them NO VISIT TO MY HOME NOR THE EXCHANGE WAS REQUIRED.System 12 does not require any exchange visit-note- does not require a new jumper from LI2 TO MAIN FRAME.Change of number is only a software change.Why did they hit you with $160 bill.I know the Indian and Philippine call operates do not know how TELSTRA operates.If you live in a remote area,the time your phone is out of service for change of number should be minimal.Please go for a refund at your "T" shop,if you live in a remote area,go to town, even better see your local or federal member of parliament.
    graeme
    16th Oct 2015
    9:33am
    The criticism should not be of consumers being lazy, but of service providers being too lazy to ensure their customers are receiving the best value service possible, so that there is no need to 'switch'.