If you’ve recently overhauled your finances, you’re not alone. After the past few years of uncertainty, it seems that many Australians are taking the opportunity to improve the way they manage their money, whether by tightening their belts to pay off debt or putting their savings in an account with best interests.
Despite a handful of rate cuts in recent years and the Reserve Bank keeping its cash rate extremely low (which influences the variable interest rates used by lenders/banks), there are indicators that savers may be rewarded with higher interest rates this year.
We recently saw surprising increases in savings account interest rates on several products in the Mozo database, which is encouraging news for consumers hoping to be more frugal this year.
According to Mozo’s Peter Marshall, we are likely to see an increase in the RBA cash rate over the next few quarters of 2022, which will give savings rates a further boost. Usually, if there is economic inflation (as we are currently seeing in the US) or a significant increase in wages, the RBA will encourage Australians to save money instead of spending it by raising rates.
However, data released by the Australian Bureau of Statistics on February 23rd shows wages only rose 0.7% in the December quarter, so that’s not exactly promising. Consequently, economists like Ross Gittins of the Sydney Morning Herald aren’t optimistic about Australians’ ability to save a lot of money this year.
Either way, if you’re unhappy with your current savings account, now might be the time to research which long-term savings options are right for you.
We’ve rounded up the best high-interest savings accounts to get you started. However, there are a few things to consider when making a choice that’s right for you and meets your goals.
This one is a biggie. An interest rate between 0 and 1% won’t get you much money, while rates around 2% will start to give you a saving boost.
One thing to watch out for: banks often offer exorbitant introductory rates to entice you before lowering them after a few months. Be sure to pay attention to the long-term numbers before making your decision.
Some financial institutions have conditions before guaranteeing you the highest interest rate available. They’re not exactly sneaky, but if you’re not careful, you could inadvertently get stuck with those grim 0-1% rates for a month.
For example, the bank may require you to meet a minimum monthly deposit or impose penalties for withdrawing money. Some may even limit the total number of transactions you can make on your account per month. Ouch!
However, there are ways to work with these terms so you can take advantage of the best rates. You can split your monthly paychecks by putting some into savings while leaving the rest in a checking account – in fact, this can be a great way to make sure you never touch your savings account. .
Now here’s where the banks get sneaky. While hidden fees are quite rare, they’re also extremely annoying and can erode your savings over time. Look for transaction, ATM, or account maintenance fees when reviewing a policy.
You can give yourself some peace of mind by checking out Mozo Expert Choice Savings Accounts, which our research team has carefully reviewed to ensure they are free of charge.
If you’re looking for a savings account that matches your moral values — not just your financial values — there are plenty of ethical banking options available to the conscientious consumer. These accounts invest in alternative energy sources or other sustainable humanitarian ventures at no additional cost to you, so you know where your money is going.
^ See Mozo Experts Choice Savings Account Awards information
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