Beat the carbon tax and avoid rising power bills

Beat the carbon tax and avoid rising power bills

Household power bills are set to rise by hundreds of dollars per year in time for winter, according to reports. And while the federal government insists that household compensation more than covers the additional costs imposed by a price on carbon, why wait for that?

There are a simple ways to reduce power prices now and you can do it without sacrificing your standard of living or having to upgrade to pricey, energy-efficient appliances.

Research commissioned by consumer group Choice and the CSIRO reveals five simple ways to offset rising costs. They are:

  • Do the washing in cold water to save $40 per year
  • Use the clothesline rather than the dryer to save $127 annually
  • Retire old fridges and bar fridges to save $185 each year
  • Switch off more appliances to save $91 per year and
  • Install a water-saving shower head to save $272 a year

The total savings is $715, which is almost twice the rise in power costs for households in New South Wales (of up to $381 per year) alone.

Matt Levey from Choice said: “Do these things and you are going to more than make up for the cost increases”.

Other ways to save

For the cooler months, the Australian Government Energy Rating website recommends setting your air-conditioning system to between 23 and 26°C. By going above that setting you may be bumping up your bill by 10 percent for every degree.

Other ways to help heat your home include; properly insulating and making sure your window coverings close snugly so there are no gaps and have a thermal layer to keep warmth in. Sealing gaps around doors will help to keep the cold air from getting in too. Keeping a free space around the outside unit of your split system will also help it to run more efficiently.

Any appliance with a flashing light will be costing you money to run. If it’s switched to stand-by mode, it may still be costing you more than you think. Origin Energy says the average Australian household spends around $180 each year on standby power, which is wasting over $1 billion each year overall. The best way to reduce this amount is to always switch appliances off at the wall.

Hot water systems are designed to last about 12 years but many will last two decades, which is great value unless they are losing water and, therefore, cash. To check for signs of inefficiency look for leaking water, which may mean an internal fracture. Lost water is automatically replaced and reheated, which is a further drain on the power bill. It’s the same for a leaking tap; if it drips once per second it wastes more than 14,000 litres per year or 38 litres of hot water per day that you’re paying to heat, according to Origin.

For the many Australians who rely on their clothes dryer in winter did you know that an average load costs about $1 in energy? There are ways to reduce that expense; clean the lint filter after each use, never overload and look for energy efficient models, because in the 6-kilogram range you can save up to 50 percent on running costs.

Finally, Origin recommends tracking your own electricity consumption. By reading your own metre at the same time over several days you’ll be able to determine your average consumption and predict the cost of your bills. So if you’re nearing your budget at the end of the quarter you’ll be able to cut energy and save.

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Learn more about savings accounts

What is an ANZ locked savings account?

An ANZ locked savings account locks your money and prevents you from spending. You may use a standard savings account as the account where your salary is deposited. You can then withdraw funds when needed, but aren’t able to make purchases with it. However, this account may not grow much as the continual withdrawing of funds will limit the interest you can earn.

With a locked savings account in ANZ, you know your savings will grow because you can’t access the money. You can also qualify for a bonus when you deposit at least $10 per month and don’t make any withdrawals. To help you with this further you can set up an automatic transfer from your regular ANZ savings or transaction account so you don’t forget to make a monthly deposit.

Your ANZ locked savings account offers you a base interest rate of 0.1 per cent per annum plus an additional bonus interest of 0.49 per cent per year. The interest is calculated daily and credited to your account on the last working day of the month.

Can you direct deposit to a savings account?

Yes. You can make one off payments or set up regular direct deposits into a savings account. This can be organised easily through online banking or by making deposits in a branch. Talk to your lender to find out the easiest way for you to set up direct deposits.

Can you set up a savings account online?

Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

Online-only savings accounts are often less expensive than other savings accounts, though they may not offer the same flexibility, features, or face-to-face service as more traditional savings accounts.

Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

What is a good interest rate for a savings account?

A good rule of thumb to keep in mind with savings accounts is to look for a rate that is higher than the CPI inflation rate. This number is constantly changing, so check the Reserve Bank of Australia’s page. If you aren’t earning interest above this then the value of your money will go backwards over time.

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

How much money should I have in my savings account?

A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

Do banks run credit checks on savings accounts?

When you apply to open a new savings account, some providers may conduct a credit check, meaning that they will ask a credit bureau for your credit history. This isn’t always the case on savings accounts though and depends on the provider, as you aren’t borrowing money. 

As you are opening a savings account and not borrowing funds, this credit check is considered a soft inquiry and should not affect your credit score. If the bank has run the credit check, you can often still open a savings account even if you have a poor score, provided you meet other requirements. 

How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

  • Personal details, including identification (driver’s license, passport etc.)
  • Tax file number
  • Employment details