In its latest white paper, "Owning Your Savings Account, Undoing the Road to Serfdom," Upworth estimates that Australian households miss out on around A$30 billion annually in unearned interest due to sticking with lower-yielding savings products.
This estimate does not account for the transfer of household deposits to higher-yielding offset accounts, which are held by 60% of Australian mortgage holders.
On average, this oversight translates to A$1,474 per Australian adult and results in a compounded loss of A$8,228 over a five-year period.
The Australian Competition and Consumer Commission (ACCC) Retail Deposits Inquiry supports Upworth's findings, highlighting the extreme complexity consumers face when navigating retail deposit products. The ACCC noted the difficulty for consumers to obtain an objective view of the best products due to inconsistent information between banks and conflicted arrangements with comparison websites.
"Especially in these times of cost-of-living crisis, more and more Australians are trying to make their money work for them and their families," Upworth co-founder Maxime Chaury said.
"Our research shows that one of the levers could be looking at their savings accounts, considering we are collectively missing ~A$30 billion in interest earnings every single year (which is an average ~A$1,474 per Australian adult).
"It doesn't come as a surprise as we found that 71% of savings accounts which have a base and bonus rate are not meeting the conditions to receive the bonus rate (which usually represent the vast majority of the interest in such accounts)."
Key issues to be aware of
Upworth's own research, conducted across 165+ savings accounts offered online as of June 2024, identifies several key issues within the savings account landscape:
Upworth asserts that this situation is not inevitable, especially considering that A$1.47 trillion in household deposits now represent a significant 30% of total bank funding in Australia, nearly double the share from 2008. Committed to empowering individuals to reclaim control of their finances, Upworth has implemented several of the ACCC's recommendations, some of which have already been endorsed by the Treasury.
To aid consumers, Upworth has launched a free-to-use Savings Account Scanner, which offers the following features:
- immediate alerts for better available savings account rates;
- monitoring of bonus rate achievements;
- alerts for the end of introductory rate periods;
- clear views of all product details with powerful self-directed tools for decision-making; and
- complete transparency about commercial arrangements, with Upworth not distributing any financial products or receiving any payments through its savings account module, unlike traditional comparison websites.
"Aussies can now compare their current savings products with the entire Australian market in a few clicks," Upworth co-founder Alexandre Chavotier said.
"Not only can they quickly identify the missed opportunities, but they can also be alerted of higher available rates, monitor their bonus rate achievements and know when their introductory rates end.
"Overall, the goal is to equip Australians with powerful tools to make decisions in full transparency and understanding of the options at hand and their implications."
You can read the full whitepaper Owning Your Savings Account, Undoing The Road to Serfdom here.