Big savings for Big Four bank customers

You could be saving yourself hundreds of dollars a month if you take a little time to shop around and find the best banking deal. Don't assume the Big Four offers the best rates.

Customers of the Big Four banks could save themselves as much as $7.5 billion a year simply by shopping around for a better deal, according to new data from financial comparison experts InfoChoice.

InfoChoice's latest research comparing the average interest and fees charged by the major four banks against the cheapest four advertised market rates - the 'Best of the Rest', shows that major bank customers could save up to $6.7 billion annually on home loans, $356 million on credit cards and $440 million on other financial lending products such as car loans.

Choose the right account
Click here to compare a detailed list of bank accounts, to make the most of your finances.

"When comparing the total amount of interest and fees paid by customers over a year, the Big Four remain significantly more expensive than many smaller institutions," said InfoChoice CEO, Shaun Cornelius.

"On average, the cost of banking with the majors is an extra 21 per cent, or $4,000 per person, in fees and charges each year, simply because customers are too reluctant, or too lazy, to find themselves a more competitive deal," he said.

Don't be fooled by the Big Four
InfoChoice's findings reveal the impact of the recently recorded interest rate differences between the Big Four banks themselves, with home loan interest rates charged by Westpac (6.76 per cent) now more than 25 basis points higher than those charged by NAB (6.49 per cent). This means a Westpac customer with a $300,000 mortgage would be forced to pay nearly $1,000 more per year in interest and fees than a similar NAB customer.

"If this situation remains unchanged, we would expect to see consumers move from Westpac to more competitive majors or the smaller lenders," said Mr Cornelius.

According to Mr Cornelius, consumers under financial strain would be well advised to start looking around for more competitive deals in advance of expected rate rises.

"With the RBA widely tipped to introduce more successive rate rises from March, and unable to prevent individual banks from raising them even higher, it is becoming increasingly important for Australian consumers to keep a close eye on where there money is going, and how hard it is working for them," Mr Cornelius said.

"While we have seen some signs that Australians are starting to look outside the majors, with a slight decrease in the share of home loans held by the Big Four between August and November last year, this trend must continue if we are to see significant savings made across the board," he said.

Get the best deal
According to InfoChoice data, the most competitive market rates for lending products such as home loans, credit cards and car loans, are usually offered by smaller banks and credit unions.

For home loans, the lowest priced lenders include:

• State Custodians
• Homestar
• Ratebusters
• Select Credit Union

For credit cards, lowest priced lenders include:
• mecu
• BankWest
• Community First Credit Union
• Select Credit Union

For savings accounts, lowest priced institution include:
• Savings and Loans
• IMB
• Newcastle Permanent
• Illawarra Credit Union

For transaction accounts, the lowest priced institution is lead by ING's Orange zero fee account.

"Unfortunately in the past, many people have resigned themselves to the fact that hefty bank fees and inflated interest rates are 'unavoidable', when in fact all that's needed to get a better deal is a little time and effort spent shopping around," Mr Cornelius said.

"The biggest mistake many people make is to 'set and forget' their loans and accounts; to get the most from their money, consumers must review their financial products regularly," he said.

"By using an independent comparison site like infochoice.com.au consumers can easily compare products from more than 100 financial institutions to ensure their money stretches as far as possible."

Find the cheapest rate
Click here to compare the top home loans to find a lender that will give the most bag for your buck.

Provided by: InfoChoice