How to get more out of your savings

How to get more out of your savings

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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Learn more about savings accounts

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.

Can you have multiple ING savings accounts?

Yes, you can open up to nine accounts with ING at any particular time. If you’re saving money for various goals, such as buying a car or taking a holiday, you can name each of your multiple ING savings accounts differently.

To get a Savings Maximiser account, you’ll need to deposit more than $1000 every month and make at least five additional purchases. If you also want to grow your savings, from 1st March 2021, you can earn up to 1.35 per cent per annum variable interest on one account with a balance of up to $100,000 when you also maintain an Orange Everyday account.

With ING, multiple savings accounts can help keep track of all your savings goals. All the accounts offer flexible withdrawals where you can withdraw as low or as high as you want without impacting your earning interest rate. However, you can only earn the bonus interest on one account. To apply for a Savings Maximiser account, you can visit

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.

Should I open a Commonwealth locked savings account?

If you have trouble saving money, a Commbank locked savings account could be a potential solution. A locked savings account won’t let you make withdrawals and as such, it can help you grow your savings balance if you keep topping it up. 

The Commonwealth locked savings account advertises high-interest rates and minimal maintenance fees, along with a host of other incentives that will encourage you not to touch the money. 

The account offers a higher interest rate for each month that you make limited or no withdrawals, as well as regular deposits. 

To qualify for a Commonwealth locked savings account with the advertised features, you will need to fulfil specific criteria such as:

  • Depositing a fixed minimum amount into the account every month.
  • Making a fixed number of deposits each month.
  • Making a minimum or no withdrawals each month.
  • Maintaining a minimum account balance.

What is a Westpac locked savings account?

The Westpac locked savings account (also known as "Westpac Life") can help customers reach savings goals faster through bonus interest. Customers receive 0.2 per cent standard base interest with a variable bonus rate of 0.35 per cent when the closing balance at the end of the month is higher than the opening balance.

There are some conditions to earn the bonus interest on Westpac's locked savings account, though. First, you’ll need to increase the balance each month either through a deposit or not making any withdrawals, and then link it to a Westpac Choice account and make at least five eligible payments using your debit card. Please consult your bank as to what an eligible payment is. 

What are the two types of NAB locked savings accounts?

With a locked savings account in NAB, you can earn bonus interest and learn financial discipline. NAB offers two types of locked savings accounts, each with their own terms and conditions.

The NAB Reward Saver account pays a variable base interest rate of 0.05 per cent per annum and a bonus interest of 0.55 per cent. You’re eligible for the bonus if you make a minimum of one deposit on or before the second last banking day and have no withdrawals in the month.

Meanwhile, the NAB iSaver account provides 0.05 per cent as the standard base interest rate and a fixed bonus margin of 0.55 per cent during the first four months from the date of opening the account. You can park your cash in the account and enjoy unlimited monthly transfers between linked daily bank accounts without impacting the interest rate.

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.

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

Can you set up direct debits from a savings account?

It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

Some transaction accounts allow you to set up direct debits and also earn interest, though you may not enjoy as much flexibility as a dedicated transaction account, or get as high an interest rate as a dedicated savings account.

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. 

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.

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.

How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.

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.