How to get more out of your savings

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September 4, 2009

Jackie Pearson investigates strategies with savings accounts you can use to make your money grow, even during tough economic times.

Fears about rising unemployment and the many headlines about investment and superannuation losses have been just the tonic for many households to review the way we manage our money in order to make it grow.

But how do you find the right strategy in order to save more? And how do find the right savings account to turbo-boost your balance and enable you to achieve your savings goals faster?

Depending on your situation, there are many different ways you can compare savings accounts and choose the right savings solutions that work best for you. Here's how three Australian households have used the economic downturn to pump up their savings.

Case Study #1
Linda, from Adelaide wants to save $15,000 by November 2010, when her daughter plans to get married. Based on her current income and expenditure levels, Linda thinks she can comfortably save around $500 a fortnight towards her goal.

Her starting point is zero, which means she needs to find an account that doesn't require a high balance before she starts earning a good interest rate. She also needs to find an account that will penalise her if she withdraws money to encourage her to save, but still wants easy access in case of emergencies.

If, for example, Linda was to open a Westpac Reward Saver account by September 14, 2009, with a current interest rate of 4.7 percent, Linda would need to save $487 per fortnight to achieve her savings goal of $15,000 by the end of October. This account ticks all the boxes for Linda as it doesn't have a minimum opening balance .

It also charges $2.50 per EFTPOS or transaction which is a significant enough penalty to stop unnecessary withdrawals but doesn't tie Linda's money up in case of emergencies.

The 4.7 percent interest rate includes bonus variable interest of 2.9 percent. This rate is only achieved if a minimum deposit of $50 is made each calendar month as well as no withdrawals for that month. It also includes a special bonus fixed interest rate of 1.8 percent for the first four months and the previous conditions also apply so no withdrawals and minimum $50 deposit.

Case Study #2
Steve from NSW has saved just about every cent of the government stimulus payment he has received and he banked last year's tax refund. His savings goal is to grow the money in order to pay for home renovations including to build a guest room for his elderly parents.

Steve currently has $6,000 and thinks the job will take $12,000 and he wants it finished as quickly as possible.

He wants to stick with his current bank, NAB as his savings are currently in an NAB Smart Reward Saver, which pays 2.61 percent p.a. interest if you make at least one deposit and no withdrawals, and has a $3 monthly fee if more than two transactions are made. If Steve saves an additional $300 per fortnight, his balance will grow to $14,057 within a year.

If Steve were to switch to the Bankwest Smart eSaver account which is fee-free and pays 4.5 percent p.a. interest if you make no withdrawals, his balance after a year would be about $14,247 - $190 more than the NAB account.

Below are RateCity's top five savings accounts based on a $5,001 deposit as at September 3, 2009. When comparing online savings accounts, be sure to check the terms and conditions as bonus rates and promotions may have expiry dates.

  1. UBank USaver - 5.11percent
  2. Westpac Reward Saver - 4.70 percent
  3. St Geroge Directsaver - Account 4.50 percent
  4. Bankwest Smart eSaver - 4.50 percent
  5. ING Direct Savings Maximiser - 4.50 percent


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