The problem, as ever, stems from the marketing departments at our banks, credit unions and building societies. They’re all as bad as each other and have recently been working overtime to find the most tantalising ways to persuade you to give them your savings.
Today it is impossible to find a single account among the country’s highest-paying deals that do not make the maximum rate dependent on some kind of condition. Instead, they all offer basic interest rates in addition to a “bonus” rate, payable if you behave in a certain way (such as depositing a minimum amount each month) or for a set period of time (bonus rate periods range from three to six months). This means savers have to be vigilant, and diligently chase the best rates from institution to institution.
The best paying accounts at the moment are all online instant-access accounts. While rates have fallen back over the past few months following reductions to the official cash rate, it is still possible to earn over 6 per cent. But you need to fit the criteria.
Top 3 best savings accounts
UBank, the online subsidiary of National Australia Bank, has just dropped from the top of the table and is advertising a base rate of 4.91 per cent, plus a “bonus” of 0.60 per cent. Payment of the bonus is contingent on the account-holder paying $200 into their savings account every month by electronic transfer.
There is no minimum deposit and there is no “end date” for the bonus rate. So, as things stand, if you can afford to save $200 a month with Ubank it looks a good deal.
However, higher rates are available.
ANZ is offering a rate of 6 per cent on its Online Saver Account is made up of a base rate of just 4.25 per cent, plus a “bonus” of 1.75 per cent payable until the end of August 2012. The offer only applies to accounts opened before the end of May.
If you get in too late, or leave your money in for too long, you will end up with a rate of just 4.25 per cent – and quite probably less if interest rates fall as widely expected in the coming months.
Citibank is offering a maximum rate of 6% for four months, consisting of a 4.75% base rate and 1.25% bonus rate. After four months, however, you’ll need to look elsewhere to keep earning the best interest.
These are high-paying accounts but if you take out either deal you need to stay alert to any announcements from the banks – either could change their rates or bonus structure at any stage. If you were careless enough to leave your money in the account accidentally, then you would probably find you lost around 2 per cent from your annual return – until you came to your senses and switched your cash into the new best-paying account.
The traditional term deposit account doesn’t feature in the best paying rates when you scour the market, but it doesn’t mean they shouldn’t be considered.
A good savings portfolio should contain a range of variable-rate and instant access accounts together with a range of different term deposits, spreading your risk across a number of institutions. This is more to ensure a reasonably steady income than to protect your actual cash, because all banks, building societies and credit unions still benefit from the government’s guarantee on the first $250,000 placed in any authorised deposit-taking institution. This $250,000 limit has just been reduced from the previous “emergency” level of $1m introduced during the panic of the global financial crisis.
Term deposit rates are fixed for the duration of the term that you choose, but are generally at a lower level than the instant access equivalents.
However, Heritage Bank is offering a 90-day term deposit at a generous rate of 5.65% which is the highest among the three-month deals on the market.
BEST SAVING DEALS
Account |
Basic Rate |
Bonus |
Max rate |
|
HISA |
5.40% | 0.61% |
||
Online Saver |
4.25% |
1.75% |
||
4.91% |
0.60% |
|||
5.5% |
||||
90 day term deposit |
5.65% |
RANSOM NOTE
There is no need for your savings account to be with your own bank.
The government guarantees the first $250,000 placed in any authorised deposit-taking institution. Don’t go over this.
NEXT STEPS
Check the rate you’re getting on your account. If it isn’t above 6 per cent, look to switch.
Consider spreading your savings across a selection of instant access and term deposit accounts to hedge your interest-rate risk and secure decent returns in this environment of falling interest rates.
