Australians Should Move Money Into High Interest Bank Accounts

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

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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

interest earnt over 10 years

Choice of High Interest Online Savings Accounts

  • Rabobank Raboplushappy face 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 Equityhappy face 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 unhappy face – 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 unhappy face – 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
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  • Bankwest unhappy face – 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 unhappy face 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 unhappy face 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 unhappy face 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.

6 thoughts on “Australians Should Move Money Into High Interest Bank Accounts”

  1. I have an ETrade Bank account which is ripping me off. They say 5.05% on a savings account but for 62 days they only credited my account for half of what they advertized. I wonder how may people they have ripped off.

  2. savings should go towards reducing your loan balance or put into a mortgage offset account to reduce the amount of interest payable. interest on savings gets taxed whereas reducing the interest does not. i like the site..

  3. Bankwest Telenet Saver only pay interest from the FIRST working day of the month to the LAST. So if take November 2008 you will only earn interest for 26/30 days (dunno if this is normal practice) but other banks I’ve used like St George pay interest for the full month

  4. All banks are a rip-off. While they are investing your
    money and making huge profits…they throw you a few crumbs in interest and report every dime and dollar to the government, which takes their cut, by taxing your capital gains. Afterall, banks are part of “big business” and “big business” runs the government. That’s why banks are backed by the FDIC and if a bank fails, THE TAX-PAYERS FOOT THE BILL. So banks can be as careless as they want to be…and they won’t lose.

    The smartest thing a person can do, is to invest in rare coins. A wise investor, can easily double his investment every 18 months or so. In addition, he doesn’t have to worry about being coerced into giving the government a cut of his profits–or be thrown in prison. “Big brother” has no way to monitor YOUR money.

  5. With so many banks going bankrupt it is in the interest of the person making a deposit to see that the banks are financially sound. Even if you get a percent less on a bank which is finacially strong I advise you to invest in that bank. Getting a high rate is good but not at the cost of the amount that you deposit.

  6. Banks are a rip off for sure. And I know because I work for one.

    The way the make a large chunk of their profits is that they make savings account redundant after 1 or 2 years, which allows them to reduce the interest rate without you knowing.

    But my advice is to play them at their own game. Shop around every 6 to 12 months to get the best rates and move your money if necessary.

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