Winter savings tips

Winter savings tips

While the unusually warm weather is doing its best to disguise the Australian winter, the quieter season of the year has arrived and lugging with it – our accumulated summer debt.  

With Australian household debt currently sitting at $1.84 trillion, according to the Australian Bureau of Statistics, there is no better time than the winter months and the new financial year, to reassess your current debt and employ a frost-proof savings plan.

Alex Parsons, CEO of RateCity, warned that spiralling debt can creep up quickly during the warmer Australian months when people are more social and try to pack the most into the long days.

“But debt will remain long after the fun dissipates so it’s important to have a plan in place to beat your outstanding debt down,” he said.  

Beat credit card debt

Burying your head in your credit card debt and summer indulgences could not only stall your repayments and increase the interest payable, but could make paying off your total debt impossibly hard.

“Credit card interest rates can spike to over 20 percent, so in order to avoid paying more for your purchases, and to keep on top of any debt you’ve accrued, you need to commit to paying off your credit card balance in full each month,” Parsons said.  

If you are unable to pay off the balance in full each month, try to pay more than the minimum amount so you are reducing the balance and paying less in interest – otherwise it could take you months, or even years, to pay off your debt.

Take advantage of low mortgage interest rates

Strike while the iron is hot and the winter fire is burning, and take advantage of the current low interest rates by making extra repayments on your mortgage.

It’s easy to put your feet up and enjoy the lower repayments but by upping the amount you pay back now, you could save thousands over the term of your loan – and shave off a few years also.

“If you pay an extra $100 per month towards a home loan amount of $500,000, based on a historical average variable interest rate of  7 percent taken over 30 years, you could save $75,167 off your total mortgage and reduce your home loan term by two years and eight months – excluding fees and charges,” Parsons advised.  

Pocket your summer nights into a savings account

Winter has a way off forcing us inside, which can be kinder on our hip pocket as we spend less on nights out, long-afternoon lunches and summer shopping sprees.

“It’s easy to feel impulsive during the warmer months but we pay for it during colder ones,” Parsons said.

“Consider taking the extra money you would be spending on a night out in town and put it into a high-interest savings account. That way your money is accumulating interest during the winter hibernation months and will help you develop some healthy savings habits to take into the warmer months.”

Invest your tax return smartly

Tax time can be joyous for some and scary for others, depending on whether the tax man is kind to you or not. If you are on the receiving end of a tax return it would be easy to see this as a windfall and spend it as quickly as it was received. But there may be smarter ways to spend your tax return.

“If you think of your tax return as a forced savings account, that you can invest further, you might be less likely to blow the whole amount frivolously,” Parson said.

“Consider putting the money into a high-interest savings account, paying down your existing debts or even putting it away for a rainy day.”

Rain or shine – any season is a good time to start thinking about your financial future and to start saving towards your important life goals.

Did you find this helpful? Why not share this article?



Money Health Newsletter

Subscribe for news, tips and expert opinions to help you make smarter financial decisions

By signing up, you agree to the Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy


Learn more about 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.

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 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. 

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 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 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.

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.

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

How can I get a $4000 loan approved?

While personal loans and medium amount loans don’t offer guaranteed approval, there are steps you can take to help increase the likelihood of your application being approved, including:

  • Fulfilling the eligibility criteria (providing ID, proof of residency, proof of income etc.)
  • Checking your credit history (you can order one free copy of your credit file per year, and make sure that there aren’t any errors that may be bringing down your credit score)
  • Comparing carefully before applying (making multiple loan applications can mean having your credit checked multiple times, which can look bad to some lenders and reduce your chances of being approved by them)

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.

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.

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.

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.