Should you shop around for a bargain?

Should you shop around for a bargain?

There’s a lot of talk about online shopping these days — more and more Australians are plugging their credit card details into their PCs, laptops and tablets in order to buy goods online. 

However, it’s no longer a matter of picking a single online retailer, clicking on a desired item and heading to the virtual checkout. Shopping around for a bargain in both bricks-and-mortar and online stores is becoming increasingly popular. But should we be doing it?

Numerous store visits common

According to Mick McCabe, Nielsen’s Homescan Shopper Panel Product Leader, shoppers have become an incredibly savvy bunch. Over the past year, one in three grocery trips involved visits to multiple retailers on the same day.

“In today’s economy, savvy shoppers are, quite literally, willing to go the extra mile to get what they want,” McCabe explained.

Close to one in three shoppers visited more than one of Australia’s four key retailers chains in the same week. The numbers speak for themselves — people are not hesitant about shopping around and pulling out their credit cards only when they feel they’ve got a bargain. There are many reasons why people do this.

Better range

Whether you’re buying clothes or seeking a car loan, one of the key benefits to shopping around is range.

If you head into a single clothing store, you’re limited to its own buyers’ or designers’ tastes. But if you jump online, you’ll be able to access a much greater range of clothing.

Likewise, when looking for financial products, it’s worth checking out comparison sites rather than sticking with a single provider’s offerings. Access to a broader range means you’re more likely to find a product that suits you.

More convenience

Do you need to pick up a new jacket or pair of shoes before the day’s up?

Shopping around requires you to invest a bit of time. However, if you jump online you can also cut out the hassle of leaving the office in your lunch break or finding a car park at your local shopping centre on the weekend. 

Shopping around doesn’t have to be time consuming if you don’t want it to be. In fact, it can actually be a lot more convenient. With a few clicks of the mouse, you could order a new item of clothing, computer part or book a holiday while you’re enjoying your morning coffee.

In the year to June, online fashion retail sales increased eight percent, while electronic games experienced an even greater surge (22 percent), according to the National Australia Bank Online Retail Sales Index monthly update for June. Given the convenience online shopping affords, it’s no wonder these categories have seen sales growth.

Better price

A better price is arguably the key driver for shopping around — and possibly the most controversial.

Traditional stores are often frustrated by shoppers who use up sales assistants efforts in order to find the perfectly sized pair of shoes, only to jump online and buy the item at a cheaper price. 

But there are lots of savings to be found online as it’s much easier for consumers to spot a great deal by being able to compare multiple products and deals side-by-side.

In today’s landscape every penny counts so it’s always a wise idea to shop around and compare — regardless of whether you are looking for a new shirt, a credit card or a home loan.

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Learn more about savings accounts

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.

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. 

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

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.

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

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 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.

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.