Whether you’re daydreaming of a holiday, buying a house or planning a wedding, saving money can be an adventure of its own.
However, there are easier ways to get more bang for your buck than investing in Bitcoin. If you want to make money on top of your rainy-day fund, it’s time to look at putting your money in a savings account.
Your money is safe and sound
Savings accounts are, as the name implies, a type of bank account that helps you to save money by providing the best interest rates for you. It is one of the easiest and safest ways to grow your savings, compared to investing in stocks or property.
This is due to the secure nature of depositing your savings with a bank or lender, which are protected through the Financial Claims Scheme (FCS).
Financial Claims Scheme
The FCS is an Australian Government scheme that protects you (the customer) in the unlikely chance you suffer a loss from the failure of your lender, up to $250,000 per account-holder.
This means your money is a lot more protected than storing it under your mattress, or gambling it with a high-risk investment.
What should you look for in a savings account?
There are several things to consider when choosing a savings account, such as annual fees or linked accounts; but the most significant feature is the interest rate.
Here are a couple different types of interest rates to look for when choosing your savings account:
- Best interest rates
The key to choosing a competitive savings account is to look at the interest rate. As savings accounts pay compound interest on the balance, it is wise to do your research and look for an account with a higher than average interest rate.
Using an interest rate comparison tool is a quick and easy way for you to find what you consider to be the best interest rates available.
- Bonus interest rates
To help you in your savings journey, lenders may offer a bonus interest rate on top of your base rate. These can usually be earned under a variety of conditions, such as meeting a minimum deposit each month or adhering to a minimum number of withdrawals. Bonus interest rates often have restrictions, so it’s a good idea to read the terms and conditions associated with them.
- Promotional interest rates
This type of interest rate is typically offered as a one off to new customers. This is different to a bonus interest rate, in that a promotional interest rate is available for a limited period and they don’t normally come with restrictions.
What is a good interest rate for a savings account?
Much like choosing a home loan, what you determine to be the best interest rates available is a personal decision.
However, it’s wise to look for an interest rate that is higher than the current Consumer Price Inflation (CPI) rate. The CPI rate is frequently changing, so you can keep track of it on the Reserve Bank of Australia’s website.