How to be cashed up and risk free

by Andrew Willink
30 July 2008

As market turmoil drives other investments down, banks are desperate for funds and are competing fiercely for the retail deposit dollar. As a result, there has never been a better time to put your cash in the bank and get a whopping rate of return without the risk associated with many other investments.

Savings accounts, in particular online savings accounts, are taking centre stage, as investors cash in on high rates of return from simple deposits in the bank. Online savers are getting up to 8.5% from their deposits and that compares very favourably to what else is on offer.

The high-interest online savings account was introduced to Australia three years ago by BankWest. As if to celebrate that achievement, BankWest has just announced a Regular Saver account that offers 10% interest. There are conditions attached though. Monthly deposits must remain between a minimum of $50 and a maximum of $500 in order to rake in the 10% return. If that fits perfectly with your finances, you could be very soon in the money bigtime.

These days all major financial institutions offer a high-interest-bearing online account. Some worth checking out are the BankWest TeleNet Saver, AMP Banking eASYSAVER Account, dragondirect DIY Super Directsaver, ING Direct Savings Maximiser and the RaboPlus Savings Account.

Term deposits are also attracting many people to lock away their money in return for a high interest rate. Offers seem to change almost daily but by comparing term deposit rates, consumers will find there are many banks and credit unions offering rates of over 8%. These products are also generally fee-free. Using a term deposit can be a good thing for the undisciplined as the money can’t be touched until the term expires.

High-interest online savings accounts offer more flexibility. You can make regular deposits or withdraw money, as needed. This may or may not be a good thing, depending on the amount of financial discipline you possess. Other good news is that, like term deposits, fees are low or non-existent with the online savings accounts.

Cash really is king, now that property has plateaued and the sharemarket remains volatile. High interest rates ensure there are a number of competitive savings options available for consumers to profit from so there’s no time like the present to compare online savings accounts and term deposits and start making your money work that bit harder for you.