Sticking with the four major banks for life will cost more than $82,000, a financial planning expert has warned, as banks redouble their efforts to sign up as many schoolchildren as possible.
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Based on the over-the-odds interest rates of home loans, personal loans and credit cards at CBA, NAB, ANZ and Westpac, financial expert Nicole Pedersen-McKinnon has calculated that lifetime loyalty will cost a customer $82,174 on average.
"The difference between the big four's standard variable rate and the most competitive mortgage has swelled to a shocking 1.37 percentage points. Historically, they've only skimmed 1 percentage point off the top," said the founder of The Money Mentor Way.
"Consumers are giving up the equivalent of a luxury car, their house deposit or retirement more than a year early by sticking with the big four."
She claims it is because of this windfall that banks are promoting kids' savings accounts with extremely high interest rates, expanding school banking programs, and offering online games and fun mobile apps, such as Westpac's PayPig.
"Banks are pushing heavily into schools to shore up the next generation of loyal, over-paying customers. They are not so much educating children as targeting lucrative future revenue sources," the mother-of-two said.
In September and October, Commonwealth Bank publicised its school banking scheme with a national advertising drive featuring Bondi Vet's Chris Brown, television host Kerri-Anne Kennerley and ex-cricketer Glenn McGrath.
Danielle Murrie, spokeswoman for CommBank School Banking, said the 80-year-old program was a fun, engaging and hands-on way for children to learn about money management and saving.
A survey of former participants showed 71 per cent felt the program had a positive influence on their saving habits, with those under 30 more likely to be regular savers as a result, she said.
In the past year, the bank has boosted its number of school bankers by 17 per cent and lifted deposit volumes by school bankers by 24 per cent.
But Nicole Pedersen-McKinnon urged parents to be wary of the program as it offered next to no lessons on shopping around and grabbing the best deal.
Competition in the kids' banking market has become fierce in the past four to five years with the advent of online banking, said Justine Davies, finance editor at ratings firm Canstar.
"Marketers know how powerful brand loyalty can be if they can win over kids. A lot of the behaviours, attitudes and brand loyalty is quite well developed by the time kids are about eight years old," she said.
"If they can attracts kids, they might just have a customer for life, plus score their parent's lucrative home loans and insurance products."
Bankwest offers the most competitive interest rate of 5.75 per cent on its Kids' Bonus Saver account - 1.73 per cent higher than the top, high-interest savings account for adults.
But consumer group Choice this month handed a Shonky award to Bankwest for luring kids with the "teaser" rate, only to sweep all but a dollar into another account that pays just 1 per cent for amounts below $3000.
"Parents need to be aware about when bonus periods end and make sure their kids know how to play the system, because that's what the banks are doing," Ms Davies said.
A Bankwest spokesman said the bank was "proud" of the award-winning product, "explicitly designed as a savings account encouraging good savings habits."
