Australian households missing out on up to $30 billion in unearned interest on savings deposits
Upworth estimates that Australian households collectively miss ~$30 billion in unearned interest per annum on their hard-earned savings deposits because they stick with lower-yielding products – without even taking into account the transfer of household deposits to higher-yielding offset accounts, held by 60% of Australian mortgage holders.
On average, this represents ~$1,474 per Australian adult and a compounded loss of $8,228 over a 5-year period.
In its Retail Deposits Inquiry, the ACCC shared its extensive research and stressed out the extreme complexity to navigate and make sense of the retail deposit products on offer. Additionally, it highlighted that “it is difficult for consumers to obtain an objective view of the best products due to lack of consistency between banks and conflicted arrangements with comparison websites”.
Upworth‘s own research carried across 165+ savings accounts offered online as of June 2024, found that the savings account landscape is broken in at least 4 main ways:
- There are wide discrepancies in annual interest rates offered between banks. The same person could earn $5.75 p.a. or $0 p.a. per dollar of savings depending on his choice of savings account
- At times, there are variations between the interest rates on offer inside the same bank with no objective reason
- Complex product design and conditions (bonus rate, introductory rate, base rate, balance tiers, stepped vs. tiered interest, etc…), often hidden behind high headline rates, make it hard to compare products
- Frequent rate changes make it impossible to stay on top of the best conditions
Upworth believes there is no fatality in a context where $1.47 trillion in household deposits represent a growing and strategically important 30% of total bank funding in Australia (almost twice the share of total funding back in 2008). Upworth is committed to empower individuals to retake control of their money
As such, Upworth has leapfrogged several ACCC´s recommendations, some of which already endorsed by the Treasury, and launched a free-to-use Savings Account Scanner for everyone to:
- Be immediately alerted of a better available savings account rate;
- Monitor bonus rate achievement;
- Be alerted of the end of an introductory rate period;
- Have a clear view of all product details and powerful self-directed tools for decisioning;
- Have complete transparency about commercial arrangements (Upworth does not distribute any financial product and receives $0 through its savings account module by contrast to traditional comparison websites)
Upworth power their scanner through the Consumer Data Rights (CDR), Australia’s official Open Banking. CDR works. Upworth delivers on its promise to safely bring tremendous benefits to all of us through increased transparency and competition.
Download the Upworth whitepaper ‘Owning Your Savings Account, Undoing The Road To Serfdom’ here.
