As part of your 5-minute budget, you already know how much you save each month.
Now it's time to put your savings to work to earn you more interest - ie. free money.
The average Australian living in a city has $34,194 in savings according to Finder's Consumer Sentiment Tracker, while those living in regional areas have an average of $25,116.
And right now, the most competitive savings accounts have rates of 5.5% or even higher. But the average savings rate in Finder's database is just 2.5%. Here's how that plays out...
The average Australian can earn $1,094* more a year by switching to a better savings account.
Even if you don't have this much stashed away, there are still plenty of ways to make your savings work harder for you.
Savings accounts are pretty simple products: You put money in, you try not to take it out, you earn interest.
But a couple of quick tips will help you maximise the interest you earn and supercharge your savings.
Let's explore a quick example of a real savings account: The ING Savings Maximiser.
This is a savings account that offers a pretty high interest rate of 5.5% if you meet the conditions.
If you don't, you get the base rate. And that's just 0.55%.
These are the conditions you need to meet:
If you don't deposit $1,000 each month, make the 5 transactions and grow your balance, you'll only earn 0.55% interest on your savings.
That's a huge difference. As we calculated earlier, the average Australian's savings at 5.5% can earn $1,983 in interest in 12 months.
But if you never meet the conditions, that 0.55% rate only gives you $193 in interest over the same period.
Check out the savings accounts in the table below to see what kind of rate you can get and what conditions you need to meet.
There's really not much else to worry about with a savings account.
Fees can be an issue. But most savings accounts charge few if any fees on savings accounts.
And remember that savings accounts are designed for saving, not spending. If you want convenient payment options like a debit card or Apple/Google/Samsung Pay, you need a transaction account.
A final thing to look out for is savings accounts with very attractive introductory rates. These rates start high – often the highest on the market – but after a few months they drop by a fair bit. Even if you meet the conditions.
But these rates can still be very attractive, especially if you already have a large amount of money to put in the account.
*Based on average savings of $35,166, comparing average interest rate of 2.5% p.a. and top rate of 5.5% p.a. over 1 year.
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