How your Netflix account and gym membership are eroding your finances
Australians with a fascination for Netflix and other subscription services, and those temporarily fanatical about fitness or gym memberships, are potentially in a financial fluster.
An industry superannuation fund says Australians are losing at least $6.5 billion every year on subscriptions and memberships they no longer use, as well as multiple super accounts.
Surveying the spending habits of more than 1000 Aussies, Rest research projects the nation spends about $3.9 billion every year on unused paid apps, subscription services and memberships.
This is then combined with the Productivity Commission's estimate that $2.6 billion is spent on excess fees and insurance on multiple super accounts.
Survey participants had an average of three subscriptions or services costing just under $40 a month. One in 10 (11%) pay more than $100 a month for their subscriptions and services.
Yet three in five Australians (62%) said they're paying for services or subscriptions they don't use or have forgotten about, and 44% said they've never cancelled subscriptions they weren't using. Rest describes Australia as a nation of "subscribaholics".
"Many Australians are feeling overwhelmed by their current and future finances, and unfortunately this can have a negative impact on their financial health," says Rest chief executive Vicki Doyle.
"One in five Aussies have never checked their bank or credit card statements, and a fifth have never checked their superannuation account. Yet checking these statements was found to be the most common way of discovering fees they weren't aware of."
A separate study from credit agency Experian, also of about 1000 participants, shows 42% of Australian consumers are unable to make their credit card repayments on time. Millennials are the most likely (30%) to fall into this category.
Of those who missed a repayment, almost half (48%) forgot and missed their due date, while 44% couldn't afford to pay it off and 28% could only afford to pay off a portion of the minimum sum.
The research also revealed 97% of Australians are not aware how much missed credit card repayments impact their credit score in the new comprehensive credit reporting (CCR) environment.
Experian explains that for consumers who have never missed credit card repayments, one missed repayment in the last three months can cut a credit score by 22%.
The drop increases to 26% with two missed repayments and 42% for those with three or more missed repayments.
Rest's Doyle says the super fund's research shows 80% of Australians avoid taking action on their finances because they're too busy, it takes too long, "or they don't know where to start".
"In fact, 64% said they knowingly pay avoidable fees, such as the fees on multiple superannuation accounts," says Doyle.
"The Productivity Commission report into superannuation found that a worker with two superannuation accounts across their working life will be $51,000 worse off at retirement than a worker with just one account."
Banking and insurance comparison website Mozo says following the RBA's recent cash rate cut, only two providers have cut purchase rates on credit cards, and only one of those by the full 0.25%.
"Several card issuers have changed their terms and conditions so that customers with an outstanding balance transfer amount can still be eligible for the interest-free period on purchases," says Mozo.
"We're yet to see much movement in personal loan rates. However, three mutual banks and one online lender have sharpened rates."
- Millennials (aged 25-39) are the biggest subscribaholics, with an average of 4.7 paid subscriptions and services costing $45.16 a month, and are most likely to pay for subscriptions they're not using or have forgotten about.
- Gen Z (18-24) is the savviest of the generations when it comes to subscriptions and services, being the most likely to have them but also paying the least each month.
- 45% of Australians feel cheated and scammed when they realise they've paid extra fees unnecessarily.