RateCity shows you one short-term solution to boost your savings and help you reach your savings goal sooner.
May 27, 2010
Are you saving hard for a holiday or a new car or even a deposit for a house? One option to boost your savings and get it to work harder is to put your cash in an online savings account.
Online saving accounts are fighting harder than ever for your savings, following the latest promotion by RaboDirect (formerly RaboPlus) which is now offering a high 6.4 percent interest until December 31, 2010. This is currently one of the highest interest rates on offer for online savings accounts, which is followed by UBank's USaver at 6.21 percent - nearly 20 basis points lower than the top rate – as shown below:
RateCity's top five highest rate online savings accounts (as at June 3, 2010):
- RaboDirect -high interest savings account at 6.40 percent
- UBank - USaver at 6.21 percent
- Westpac – Reward Saver at 6.20 percent
- Bankwest – TeleNet Saver at 6.15 percent
- NAB – iSaver at 6.00 percent
What's the catch?
Be careful of promotional rates and bonus rates when choosing an online savings account as special offers usually come with a set period where the extra interest expires.
For example, RaboDirect's High Interest Savings Account interest rate comprises 5 percent variable and a bonus 1.40 percent fixed rate until the end of the year. But unlike many other accounts, RaboDirect's account has no strict conditions to be entitled to the bonus rate. This means that you don't have to deposit a certain amount each month or make no withdrawals to get the bonus 1.40 percent.
It's not just for new customers either. However, if you already have the account the bonus rate will only apply to deposits from May 20. After the cutoff date on December 31, the interest rate will revert back to the standard variable rate, which is currently at 5 percent.
The offer is available on all balances of up to $1 million, and there are no fees and no minimum balances required. So if you were to deposit $5000 initially and continue to deposit $200 each month for six months, at the end you will save over $6378 in total and potentially earn interest of more than $178 (if the rate remains the same).
UBank’s USaver account includes a 0.36 percent bonus rate with the condition of setting up an automatic savings plan to have a minimum of $200 automatically deposited from your everyday transaction account to your savings account each month to be entitled to the offer.
Westpac’s Reward Saver has a base rate of 1.25 percent, a promotional rate of 1.55 percent for four months for accounts opened by June 6 and an extra 3.4 percent bonus interest if you deposit at least $50 no make no withdrawals each month. For these customers, after four months and if a withdrawal is made they will only earn potentially 1.25 percent on their savings.
Get the most out of your savings online
The hard part of saving is choosing and setting up your online savings account but the easy part is seeing your money grow and reaching your financial goal. To get the most out of your savings account, follow these handy tips:
- Look for an online savings account that offers a high interest rate by comparing online. Look out for the terms and conditions because many accounts have bonus rates on condition of deposits and withdrawals.
- Work out a budget so you know how much you can deposit into your account each month. Obviously the more money you deposit the more interest you will earn and the more savings you will accumulate.
- Setup an automatic transfer from your everyday transaction account to occur each month. You will hardly notice the money leaving your account and next time you look at you balance on your online savings account you will be pleasantly surprised!
- Take note of when the bonus period ends and make sure you compare online because it's worth switching for a better rate.