Many young people are too careless, apathetic or financially uneducated to look for better financial deals, worrying new research has found.
Young people are “vulnerable” because they tend not to be savvy about money, Financial Counselling Australia executive director Fiona Guthrie told The New Daily, but the good news is fixing the problem is not difficult.
Almost 90 per cent of Australians aged 18 to 24 chose to not shop around for the best interest rates on credit cards, saving accounts and loans, a survey conducted by comparison website Canstar reported.
Many of the problems centred on hunting for a better deal. The research found that 53 per cent of young people with credit cards did not look for the best value products, and a majority (54 per cent) admitted that if they looked around they were likely to get a better offer.
Almost half (46 per cent) said they didn’t know the interest rate they were paying, while a third (30 per cent) had no idea how interest rates worked.
Shopping around can be “quite complex” and “really confusing”, but it’s truly worth it, Ms Guthrie said.
This isn’t just a problem with 18- to 24-year-olds either.
“A lot of us suffer from inertia when it comes to shopping around,” she said.
How to find a better deal
There are plenty of safe ways to approach banking, experts told The New Daily.
“When you’re young, you’re unlikely to have complex banking needs, so you can afford to shop around and take advantage of competitive banking offers,” ME Bank head of deposits and transactional banking Nic Emery said.
“ME Bank’s ‘Building Financial Confidence’ program is available free online and provides financial information tailored for different ages and stages of life, and is one of the most comprehensive programs of its type.
“The education modules cover everything, including basic topics for people starting work or moving out of home.”
There are a few ‘myths’ to be aware of and some handy tips to follow, CreditCardFinder.com.au money expert Michelle Hutchison said.
“It is easy to fall into the trap of thinking being loyal to your bank will get you a better deal … that is a myth,” Ms Hutchison said.
“You need to ask yourself, ‘What will I be using the card for?'”
“If it’s for emergencies you want a card with no or a low annual fee and not a rewards card. If you’re using it overseas, make sure it has low overseas transaction fees, while if you’re moving out and have big furniture expenses for example, get a card with a low interest rate.”
She also said if you want to pay off the card every month look for a low monthly interest rate. But if you want to carry over your monthly repayment balance, make sure the card has a good balance transfer allowance.