I remember reading an article written by a UNSW Business School researcher stating you are more likely to change your spouse than your bank. Not sure how much statistical evidence there was to back him up, however I have to admit I have seen many cases where this has been true.
We happily shop around and try to get the best deals in most things – electronics, flight tickets, petrol… however we tend to stick with our banks even when we could gain thousands of dollars through better interest rates elsewhere. Money which we could then spend elsewhere.
When it comes to switching banks, this inertia seems to come from inbuilt psychological reasons. Changing banks is seen to be time consuming and the benefits reaped from lower interest rates are rewarded too far down the track to motivate us. We prefer quick immediate results rather than carefully considered alternatives that pay off in the future. And this is exactly where banks get the chance to exploit our psychological weaknesses. Relationship banking is one of the many strategies banks use to entangle customers in mortgages, insurances and all their products until it is far ‘too complicated to move’.
As consumers, our right to choose and ability to switch fuels competition between the banks. Many banks now offer refinance cash backs of up to $1,500 to cover all refinancing costs. This means not only is it free to make the move, you may be left with some extra cash in pocket in addition to the potential savings of thousands of dollars from the interest rate difference.
The money you save, no matter where it is directed, will ultimately be spent elsewhere and hence used to stimulate other areas of the economy.
See the Accru Financial Services info sheet to find out what we can do to help.