A serious chunk of household deposits are sitting idly in household bank accounts. As much as $1 bln extra could be earned just by paying attention and 'doing something'

Most household savings are in either transaction accounts, savings accounts or in very short term deposits.

As at the end of January, households had $146.8 billion in these short term accounts, with ...

- $38.5 bln in transaction accounts
- $77.8 bln in savings accounts,
- and at least $30.5 bln in term deposit accounts that mature within 90 days.

It may be more than that because the Reserve Bank data doesn't split out the household component from the maturity data series for all deposits. There could easily be as much as $60 bln in the $142.1 bln of household term deposits that will mature in 90 days. After all, households like short term exposures in their savings habits. So all up, we could be talking closer to $200 bln of deposits that are in banks on very short maturities.

Putting that to work harder should be a focus of savers.

This is what some banks are are offering for this funding.

If savers want to keep things short, they still have some great opportunities to earn seriously higher cash returns.

For example, if households diverted half their transaction balances to the high returning Rabobank Premium Saver at 3.50% (still all at call with the restriction that the balance increases), they would earn +$700 million in interest in a year. If they shifted all their saving accounts to the Rabobank 3.50% Premium Saver there could be as much as $350 mln in higher interest to be earned. That is based on those accounts offering at least ½% more than most other competitors. Together, that is real money, $1 bln in interest earnings per year that is currently being foregone.

It is not clear why we collectively give that up. It can't be for liquidity access reasons because neither BNZ nor Rabobank stand in the way, via their account conditions, for making an on-call withdrawal. It can only be financial laziness - misguided loyalty to uncompetitive banks. More if you include the registered non-bank deposit takers.

And if you asked other banks to match the best-in-market offers, you may get a positive response. Worth an ask.

With the arrival in about 100 days of the Depositor Compensation Scheme (the government guarantee), there are good reasons to open accounts with multiple banks. Sure it will take a few moments to set that up, but establishing online access at a number of banks will then give you an easy way to transfer funds between them, and into the most competitive options. It is effort that will pay off if you have funds in accounts earning little or nothing.

Updated: An earlier version of this article referred to a wrong/earlier rate for the BNZ Rapid Saver.