With the country’s major banks slashing their savings interest rates to protect their profit margins, customers are left with little choice but to look outside of the big four to get a reasonably attractive rate.
So who’s got the best on offer?
According to comparison site, www.finder.com.au, RaboDirect offers the best rate at 3.05 per cent for its high interest savings account. It is an introductory bonus rate for the first four months to give your savings a kick-start.
HSBC’s Serious Saver account is a close second, offering 3 per cent as an introductory rate for the first four months.
RAMS saver account offers 3 per cent but you have to deposit a minimum of $200 a month and make no withdrawals.
ME Online offers 2.95 per cent when you link to a ME Everyday Transaction account and make a weekly purchase with your debit Mastercard using tap & go.
Australian Unity also offers 2.9 per cent but you have to make a monthly deposit of $250 and make no withdrawals each month.
ING Savings Maximiser has 2.8 per cent interest when you link your Orange Everyday bank account and deposit $1000 plus each month.
Citibank Online Saver has 2.85 per cent interest as an introductory rate for four months before reverting back to 1.70 per cent.
It is also important to differentiate between a savings account and a bank account. A bank account or everyday transaction account is used for daily transactions and day-to-day spending. A savings account is designed to keep your money safe while you earn interest on it.
If you can afford to lock away your funds, then you should consider a term deposit.
If you want to put away a monthly sum of about $500 a month, look at a bonus saver account which pays the highest interest.
However, if you have a lump sum of less than $10,000, it’s best to put the cash in an at-call savings account which pays a decent amount of interest but comes with a number of conditions.
But if you have more than $10,000 and are prepared to lock it away for a set amount of time, then you have two options, you can either keep the funds in a term deposit or notice saver.