How can I increase my savings quickly?

There are multiple options and pathways to grow your savings, and opening a savings account is a common starting point. You probably receive your salary in a transaction account, which allows you to withdraw cash or pay for purchases using a debit or ATM card. However, a transaction account usually pays you little or no interest, so you need a separate savings account. 

You should understand that the interest rate advertised on savings accounts is linked with the Reserve Bank of Australia’s cash rate, and may be subject to market fluctuation. If the cash rate rises, so too should your savings rate, and vice versa if it falls. 

As a result, providers may ask you to fulfil certain conditions to earn more interest than the base rate. These include restricting the number of withdrawals, making regular deposits, or maintaining a minimum balance. 

The simplest way to grow your savings is to set up a regular deposit into whatever savings account you choose, irrespective of the conditions. To help you reach your savings goals sooner, you may decide to forgo some casual expenses. You should also try to minimise or consolidate your debt to ensure that your savings can help you in the future. 

If you’re comfortable locking up your savings for an extended period, you could put the amount in a term deposit which is likely to earn you more interest. Before choosing which option is right, ensure you understand the conditions and that they suit your financial situation.

Most savings accounts offer bonus or introductory interest rates for the first few months that are higher than the standard interest rate to entice new customers. This rate will eventually end and revert to the standard variable rate. If you opt for one of these accounts, you need to consider if that rate is worth it, not just the introductory rate.

Alternatively, you could sign up for a conditional high-interest savings account that offers higher interest rates if you meet certain conditions. Another option is an online savings account that offers a higher rate thanks to having fewer overhead costs. You should also compare the rate offered by different providers before choosing a savings account to see which one best suits your needs. Or you could use the information you get comparing different savings accounts to see if your current bank or financial institution will offer you that rate.

Opening more than one savings account can be helpful if you have multiple savings goals. As long as you can make regular deposits to the various accounts, you may get a high-interest rate on at least one of these accounts. If you don’t secure a reasonable interest rate, you may end up paying account-related fees to the provider and depleting your savings rather than growing them. 

If you’re worried about account keeping fees, an online savings account may be suitable. They usually have lower fees due to no overheads for physical locations like other providers do. However, they may offer fewer options or more complicated options when it comes to dispute resolution or contacting them. 

Growing your savings quickly can require facing some short-term inconveniences, but you’ll reach your savings goal faster.