The lazy tax

When was the last time you put your bank fees under the microscope? If you’re like most people, you probably don’t remember.

According to consumer advocates Choice, only one person in five has reviewed their bank accounts in the last two years. Just 12 % say it’s crossed their minds, but they haven’t done anything about it.

And a report in 2010 found nearly half of those surveyed had never considered switching banks.

What’s the lazy tax?

It’s term used to describe the extra fees paid by people who don’t shop around. If you’ve got your insurance, superannuation and banking products on autopilot, there’s a solid chance you’re paying the lazy tax. Choice says the average family forks out $468 in bank fees each year, with the Reserve Bank reporting banks pocket more than $1 billion annually from fees on deposit accounts alone.

Switch and save

If you’ve been with the same bank for a while, then it might be time to take a look at the competition. Dig out your statements, fire up the internet and run some comparisons.

Most banks offer fee-free accounts for general banking. So if you’re paying regular fees, ask your bank about getting a better deal. Remember, it’s cheaper for the banks to keep customers than to find new ones, so chance are they’ll come to the party.

If you’ve got loans with your bank, find out what interest rate you’re paying, and how much you’re being slugged in fees (or look for the ‘comparison rate’, which takes fees into account). Just doing this could save hundreds of dollars in fees every year, and in the case of a mortgage, thousands of dollars in interest over the life of the loan.

If you’re thinking about refinancing with another bank, make sure you take any new charges into account. And before you sign anything, ask your bank to match the competition. If you’ve been with them for years, you could point that out too!

The once-a-year checkup

Why not get in the habit of giving your finances the once-over every year? It won’t take long and remember – you don’t automatically get rewarded for your loyalty.

General advice disclaimer

The information contained in this document is provided for education purposes only. It has been prepared without taking into account your particular financial needs, circumstances or objectives. You should consider the appropriateness of the information as it relates to you. You may wish to consult an adviser before you make any decisions relating to your financial affairs.