CHOICE membership

Automatic renewals - the proferred option may be the worst for you

Don’t be lazy when renewing accounts or subscriptions!

My Term Deposit with St George Bank matured today. Using their Internet Banking facility I clicked on the ‘renewal options’ button and was offered the choice of 0.7% to renew the account over the same 12 month term as the default and highlighted option, or to choose another option. I intended to renew for 12 months, but elected to click on the ‘other’ button just to see what my options were. When I selected the option to renew for 12 months using the full balance of the account (ie exactly the same as the default), the rate offered included a bonus of 0.22% - ie St George Bank’s reward for a customer selecting the recommended renewal offer is to deprive them of 24% of the annual interest that was available to them!

I find this behaviour to be unconscionable, and, if the fact that the bank highlights a particular renewal option should be considered to be a recommendation, almost certainly falls short of legislation with regard to providing ‘best advice’. But this sort of behaviour is not only found in banks:

I own a couple of internet site URLs, that must be renewed at least annually. This year I received a renewal notice from Netregistry, and when clicked in the email to renew, was presented with the default/recommended option to renew for 2 years for something like $50. When I looked at the option to renew for 1 year, the price was around $20, and for 3 or 5 years were more or less $20 per year. So the option ‘recommended’ by Netregistry was the most expensive of all available options!

The lesson is not to blindly select the option recommended by your existing provider - they don’t always recommend the option that’s best for you (and often do quite the opposite)!


I agree that you should never take the automatic renewal option on anything without checking first at that institution and indeed others with similar products - and not just term deposits but everything from insurance to credit cards.

But there is something far worse with these automatic renewals that you are at least told about and that is when you first buy a subscription to something e.g. Norton internet secutiry package. They ‘force’ you into signing up for automatic renewal when you first purchase the product and if you are not alert that is exactly what happens. If you do want the product you have to agree to the automatic charge, complete the transaction and then take a number of steps to cancel the on-going payments. But they tell you none of this and the default position is the automatic debiting of your account.