The short-term solution to grow your wealth

The short term solution to grow your wealth

RateCity shows you one short-term solution to boost your savings and help you reach your savings goal sooner.

May 27, 2010

Are you saving hard for a holiday or a new car or even a deposit for a house? One option to boost your savings and get it to work harder is to put your cash in an online savings account.

Online saving accounts are fighting harder than ever for your savings, following the latest promotion by RaboDirect (formerly RaboPlus) which is now offering a high 6.4 percent interest until December 31, 2010. This is currently one of the highest interest rates on offer for online savings accounts, which is followed by UBank‘s USaver at 6.21 percent – nearly 20 basis points lower than the top rate – as shown below:

RateCity’s top five highest rate online savings accounts (as at June 3, 2010):

  • RaboDirect -high interest savings account at 6.40 percent
  • UBank – USaver at 6.21 percent
  • Westpac – Reward Saver at 6.20 percent
  • Bankwest – TeleNet Saver at 6.15 percent
  • NAB – iSaver at 6.00 percent

What’s the catch?
Be careful of promotional rates and bonus rates when choosing an online savings account as special offers usually come with a set period where the extra interest expires.

For example, RaboDirect’s High Interest Savings Account interest rate comprises 5 percent variable and a bonus 1.40 percent fixed rate until the end of the year. But unlike many other accounts, RaboDirect’s account has no strict conditions to be entitled to the bonus rate. This means that you don’t have to deposit a certain amount each month or make no withdrawals to get the bonus 1.40 percent.

It’s not just for new customers either. However, if you already have the account the bonus rate will only apply to deposits from May 20. After the cutoff date on December 31, the interest rate will revert back to the standard variable rate, which is currently at 5 percent.

The offer is available on all balances of up to $1 million, and there are no fees and no minimum balances required. So if you were to deposit $5000 initially and continue to deposit $200 each month for six months, at the end you will save over $6378 in total and potentially earn interest of more than $178 (if the rate remains the same).

UBank’s USaver account includes a 0.36 percent bonus rate with the condition of setting up an automatic savings plan to have a minimum of $200 automatically deposited from your everyday transaction account to your savings account each month to be entitled to the offer.

Westpac‘s Reward Saver has a base rate of 1.25 percent, a promotional rate of 1.55 percent for four months for accounts opened by June 6 and an extra 3.4 percent bonus interest if you deposit at least $50 no make no withdrawals each month. For these customers, after four months and if a withdrawal is made they will only earn potentially 1.25 percent on their savings.

Get the most out of your savings online
The hard part of saving is choosing and setting up your online savings account but the easy part is seeing your money grow and reaching your financial goal. To get the most out of your savings account, follow these handy tips:

  • Look for an online savings account that offers a high interest rate by comparing online. Look out for the terms and conditions because many accounts have bonus rates on condition of deposits and withdrawals.
  • Work out a budget so you know how much you can deposit into your account each month. Obviously the more money you deposit the more interest you will earn and the more savings you will accumulate.
  • Setup an automatic transfer from your everyday transaction account to occur each month. You will hardly notice the money leaving your account and next time you look at you balance on your online savings account you will be pleasantly surprised!
  • Take note of when the bonus period ends and make sure you compare online because it’s worth switching for a better rate.

 

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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.

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 multiple savings accounts with UBank?

UBank offers customers an opportunity to make the most of their savings by opening multiple savings accounts. Having multiple savings accounts with UBank may be ideal for savers tracking different goals in separate accounts. 

It’s important to note that to earn bonus interest, you will still need to meet the conditions of the UBank savings account every month. If you don’t make these deposits, you will receive the standard interest rate, which is typically lower. 

Keep in mind that you won’t earn bonus interest on your UBank savings account in the month an account is opened and if you open multiple savings accounts with UBank, you'll start earning any bonus interest the following month. 

It's also not yet known how long the special interest rate will hang around for, so please check with your bank for more information. 

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.

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 ingdirect.com.au.

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 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.

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 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 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.

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 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 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.