Infochoice’s Dennis Orrock has said “savers can easily move their money into a high yielding [bank account] product … if they don’t, they are either stupid or happy for the bank to rip them off” (Sun Herald 13/04/07) and I have to agree with him
Despite high interest online savings accounts being available for over 7 years the vast number of Australians still have their money lying dormant in low interest transaction accounts offered by the major banks despite the fact that they pay rip off low interest rates like 0.1%.
Benefit of a High Interest Online Savings Account
To give you an idea of the benefit you can gain from keeping your savings in a high interest online savings account compared to an everyday transaction account see the graph below(Comparison shows bank balance over 10 year period where CollectingWealth bank offers 0.1% interest and Generous Bank offers 6.7% interest).
After 10 years the CollectingWealth account balance is a paltry $10010 and the Generous Bank account balance is $19506
Choice of High Interest Online Savings Accounts
- Rabobank Raboplus – their RaboPlus savings account currently offers the highest interest rate with no catches or conditions and you can link it to any other bank’s transaction account. Their net banking system has lots of great features, is ultra reliable and their phone customer service is great. Also they offer a 2nd level of security by using a Digipass password generator.
- Members Equity – I have a Interest Me transaction account and high interest ME Online Savings Account. Their net banking system has lots of great features, is ultra reliable and their phone customer service is great.
- Suncorp – offers a rate slightly higher than the big 4 banks on their high interest “Everyday Options Sub-Account” but as the name suggests it must be linked to another Suncorp account.
- ING Direct – was the market leader for several years, offering more interest than any other bank for their “Savings Maximiser” product and I was an early customer. In the last few years they’ve rested on their laurels and strong brand and for quite some time have been out of the top 5 and sometimes even the top 10 when ranked by interest rate
- Bankwest – I’ve tried their “TeleNet Saver” account but in the end their rate is only market leading for the first 12 months and then falls back to at least 0.5% less. Also their netbanking system is pretty bare bones and several people have told me that their IT systems are unreliable eg: there was an outage for several days in early January 2007.
- Citibank their “Plus Account” offers a high rate, but you must keep at least $5000 in Citibank account that is earning 0% interest so it’s kind of pointless.
- Easystreet Financial Services I used their EasySavings account for several years while it was the interest rate market leader, but eventually their constant errors wasted so much of my time tracking down missing/wrong transactions that I withdrew all my money from them.
- HSBC has a “Serious Saver” account but I don’t take it seriously because interest is not paid in any month where you have either made a withdrawal or closed your account.