Where to park your tax refund to get the best bang for your buck

Where to park your tax refund to get the best bang for your buck

The air is getting cooler and the sun is setting earlier. We all know what that means – it’s almost tax time!

If you’re one of the lucky Australians who’ll be getting a tax refund this year, you have a few places that you can deposit your dollars. But’s up to you and your financial needs to choose the most competitive option.

1. Put it in a high interest savings account

With virtually no-risk – putting your money into a high interest savings account can very easily help you grow your money over time.

According to RateCity research, there are savings accounts with rates as high as 3 per cent available. For most accounts, the maximum rate is only available if you follow the account conditions, such as making regular deposits into the account or not withdrawing funds. Otherwise your savings account can revert to a lower base rate.

This means that if you had a tax refund of, say, $1,500 and continued to make regular monthly deposits of $200 into a savings account accruing interest monthly, in 5 years you would have saved $14,672. This would make the total interest earned $1,172.

If you didn’t make regular deposits, however, you can still grow your savings. For example, if you took that same $1,500 tax refund and put it in a savings account with a base rate of 1.81 per cent accrued monthly, in 5 years you would have $1,642 – interest earned of $142.

As you can see, savings accounts can be an effective place to put your tax refund – if you continue to make regular deposits and earn the account’s max rate.

Major banks

Base rate

Max rate

Interest earned per month on






Monthly deposit of $200, no withdraw





Monthly deposit, account balance must have increased





Monthly deposit, no withdraw





Min monthly deposit of $10, no withdraw

Market leaders

Bank of Queensland




Monthly deposit of $1k





Monthly deposit of $200

ME Bank




Use linked trans account weekly





Monthly deposit of $1K

Rates accurate as at 9/05/2019

2. Turn to a term deposit

Term deposits are similar to savings accounts, however unlike the former you are locking away your deposit and are unable to access those funds for a set period of time.

These are also a low risk option, as a fixed rate means you’ll know exactly how much interest your money will accumulate regardless of changes in the market.

For example, if you took that same $1,500 and put it in a high rate 5-year term deposit earning 3 per cent, at the end of the fixed term you will have $1,725.

If you’re the kind of person who is prone to dip into your savings or not make regular deposit, a term deposit can be a competitive option.

Major banks

1-year rate

3-year rate

5-year rate

















Market Leaders

Australian Unity




Qudos Bank



Bank Australia



Rates accurate as at 9/05/2019

3. Pay off your credit card debt

When you receive a tax refund your first instinct can often be to spend, spend, spend. But what if you want to get on top of one or more debts?

Credit cards typically have higher interest rates than other debt sources, such as home loans or personal loans, which means that they can very easy get out of control if you’re not paying it down when you can.

If you’ve been slowly growing a credit card debt, it’s a good idea to try and get on top of it whenever you find yourself with a little more money thank you expected.

If you have a $5,000 credit card bill and are only making minimum repayments at 18 per cent, you can expect to pay $17,181 in total over 33 years. If you continue to only make minimum repayments but take $1,500 off your debt from your tax refund, you’ll shave 6 years off this time frame.

What if I have more than one source of debt?

If you’re wondering which of your debts to pay off first, the answer is simple – it’s generally best to choose whichever has the highest interest rate. It’s often a mistake to pay of the biggest debt first, such as your home loan, as something like a credit card will typically have a much higher interest rate and therefore a higher chance of causing your debt to grow out of your financial control. 

4. That being said… put it into your mortgage

If your home loan allows for lump sum payments, you could also consider putting your tax refund into your mortgage.

Making additional one-off payments can help you to reduce the cost of your loan, shave off some of the interest owed and also help you to repay the loan back quicker.

If you have a $500,000 home loan that you’re paying off over 30 years at an interest rate of 4 per cent, making a one-off lump sum payment of $1,500 from your tax refund will amount to $2,579 saved in interest over the life of your loan.

This means your $1,500 lump sum payment has grown into additional saving of $1,079 off of your home loan.  

Keep in mind that if your home loan has a fixed interest rate, you may not be able to make any lump sum or extra repayments without copping fees. Some other mortgages may also have a limit on the amount you can pay in additional repayments.

5. Donate it to charity

If you don’t measure your returns in monetary value, you could always donate your tax refund to the charity of your choice.

Charity comparison websites, such as ChangePath, are helpful resources to find not-for-profit that best meet your needs, as well as grade their transparency and financial sustainability.

And if you are so financially inclined – keep in mind that you can always claim tax on that charitable donation next year!

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Learn more about bank accounts

How do I open a bank account for a child?

There are few better ways for a child to learn about money management than through savings. And there’s a plethora of bank accounts designed specifically for young people and children.

A bank account for a child can be opened online, over the phone or in a branch in a few easy steps. The minimum age a child can open a bank account for themselves usually ranges between 12 and 14.

If the child is too young to open the account, you can do it for them as their legal parent or guardian. 

To do this, you would need to be over 18, have an Australian residential address and currently reside in Australia (or have proof of residency).

You would also need to provide:

  • Identification for yourself and the child
  • Your tax file number (TFN) or TFN exemption

Depending on the bank account, you might be able to choose what level of access the child has to their bank account (online and via the phone).

Which bank is best for business accounts?

Unfortunately, there’s no definitive answer to the question of which bank is best for business accounts. That’s because ‘best’ will differ from customer to customer, depending on their unique circumstances. These include not only your company’s financial position, but also its size, its age and the sector in which it operates. Another factor to consider is what features you want in a bank account. Your business may require different features than another business; and your business may require different features tomorrow than it does today.

The best thing to do is to thoroughly research the market before opening a business account. And when you do open an account, you should reassess your options every year or two, because the market moves quickly. A particular bank might offer the best account today, but be surpassed by one or several rivals tomorrow.

Are bank accounts frozen when someone dies?

Yes, Australian bank accounts are frozen when someone dies. If you want to close the account of somebody who has died, you might have to provide proof of death and a copy of the will. You might also have to prove your relationship to the deceased person.

If you have a joint bank account with somebody who has died, you will generally be entitled to all the money in the account. Again, you might have to provide proof of death if you want to change the bank account from a joint account to a one-person account.

Do you need a bank account to get a credit card?

To get a credit card, you need to show proof of income, which will almost certainly require you to have a bank account.

What do I need to open bank accounts online?

Opening a bank account online is a simple process and only takes between five to 10 minutes to complete. To get started you will need a computer or smartphone with internet access.

Information to have available when you’re ready to apply is:

  • Identification (such as driver’s licence, birth certificate, passport, proof-of-age card)
  • Tax file number
  • Residential address, email and a contact number

In some cases, you might be asked to provide employment details. If you’re not able to verify your identity online, most financial institutions let you provide this in the branch at a later date.

There are some types of bank account that you can apply for only in a branch. However, most bank accounts can be applied for conveniently online.

Can debt collectors take money out of your bank account?

Many people find themselves struggling to cope with debt at one time or another. In these cases, a debt collector could contact you to demand payment for a debt, to explain the consequences of you failing to pay a debt, or to organise alternative payment arrangements.

If you’re contacted by a debt collector, you may be wondering what their rights are and whether they can take money out of your bank account.

Creditors cannot access money in your bank account unless a court order (also known as a ‘garnishee order’) is made to allow creditors to recover debt by taking money from your bank account or salary.

If this happens, the creditor can take money out of your bank account unless you pay the debt in full or make an alternative payment arrangement such as paying in instalments through the court.

Can I set up a bank account online?

Most Australia-based lenders will allow you to set up a bank account online. Requirements vary from lender to lender, but you will probably need to provide a passport or birth certificate, as well as a driver’s licence, Medicare card or another form of secondary ID.

Can you open a bank account at 16?

Yes, you can open a bank account at 16, or even younger. If you’re 13 or under, you will probably need a parent to accompany you to a branch.

Can I link a bank account to Paypal?

Paypal is a safe and convenient way to pay online without the need to share your financial details. You can send and receive money or accept credit and debit cards as a seller using Paypal.

It’s easy to link your bank account to a Paypal account and start making transactions within minutes.

To start, you first need a Paypal account (it’s free to join). When setting up your Paypal account, you will be prompted to link a credit card or bank account (or both if you wish).

PayPal works without a balance; you can use Paypal to shop or send money when your balance is zero.

When your Paypal balance is zero, Paypal will ask you to choose your preferred payment method at the checkout.

This could be either your linked bank account or credit card. Your bank details can be updated if you change banks or credit cards.

How do you open a bank account under 18?

If you’re under 18 and you want to open an Australian bank account, you will need your passport or birth certificate. (Some lenders might require just a Medicare card or driver’s licence.) You can apply online or at a branch. If you’re 13 or under, you will probably need a parent to accompany you to a branch.

Can foreigners open bank account in Australia?

If you’re migrating, studying or working in Australia, you’ll be pleased to know that you can open an Australian bank account. For the most part, opening a bank account in Australia is a simple process which starts by comparing the types of bank accounts foreigners can open in Australia.

Once you’ve found a bank account that suits your needs, you can start the application process.

When you apply for the account, you’ll need to provide proof of ID which may include your passport, overseas ID or credit card. You may also need to provide a copy of your visa and proof of address in Australia.

Depending on the bank and the type of account you choose, you may be able to apply for the account online or over the phone before you arrive in Australia.

Can a debt collector garnish my bank account?

A debt collector can garnish your bank account, but only with a court order. This drastic action is usually taken only if you’ve ignored several notices asking you to pay the debt.

If this happens, there is nothing you can do to stop it other than immediately pay back your what you owe in full or make arrangements to pay it off in installments.

Once a garnishee order is issued, your bank will put a freeze on your account as it processes the order. This usually takes two to three days and you won’t be able to access any of your money during this time.

If you have Centrelink payments, they may be protected, depending on what the court order says.

How long does it take to open a bank account?

The length of time it takes to open a bank account varies, depending on whether you want to open it online or in person.


Most banks and credit unions have simple online applications that usually take no more than 10 minutes to fill out. It can be especially fast if you have your identification documents like your driver’s licence and passport handy. Sometimes you will instantly be approved and the bank account opened. However, depending on the financial institution, it may take a day or so to be processed and your account number issued. Your account information and ATM or debit card will then be mailed to you, which usually takes between five to 10 days.

In person

If you decide to go into a branch or office to open a bank account, it may take about half an hour. Make sure you bring your identification documents with you. Also book an appointment if you can, otherwise you might be forced to wait in line. Sometimes your ATM or debit card will be issued on the spot, otherwise you’ll need to wait for one to arrive by mail, which usually takes between five to 10 days.

Can you get a payday loan without a bank account?

Yes. Some payday lenders are willing to transfer loans to prepaid debit cards instead of bank accounts.