Your Money

DO NOT keep savings in a transaction account

- February 10, 2023 3 MIN READ
Don't keep savings in a transaction account

Yes, loan interest rates are going up, but so is interest paid on savings accounts. Granted many banks haven’t lifted savings rates at the same pace as loan rates, but many have.

I was stunned by a survey from research group Finder which found more than 1 in 2 Aussies (53 per cent) are still using a transaction account to store their savings, meaning they are getting zero per cent interest on their money.

That is crazy. At least look at the savings and term deposit options at your bank which are paying 4 per cent on a term deposit and over 2 per cent on savings accounts.

Or keep your savings in an offset account where the interest earned goes against your home loan.

The Finder survey also found two thirds (64 per cent) of Australian don’t know the interest rate on their savings account and 36 per cent of people hold a savings or transaction account across multiple banks.

Current highest ongoing savings rates

Current highest ongoing savings rates

Source: Note: ING rate effective 14 February 2023.

Big four bank savings rates – post February RBA hike

Big four bank savings rates – post February RBA hike

Source: CBA rates effective 10th February. Westpac Life and eSaver rates effective 21st February. NAB rates effective 17th February. ANZ Plus Save rate effective 14th February.

5 ways to increase your savings rates

1. Spend less

It goes without saying that the easiest way to have more money to save is to spend less of the money you already earn. Easier said than done? Start by reducing the cost of the ‘big three’ – your housing, transport and food. There are plenty of tips to reduce these areas here: How can I reduce the cost of living?

2. Ask for a pay rise

It’s always awkward to go cap in hand to the boss to ask for more money. But if you don’t ask, you won’t get. It’s a very rare boss indeed that leaps up one day and randomly gives you a raise. Only if they’re scared you’re going to leave…

Here’s the thing: it doesn’t have to be awkward. If you get your performance examples, proven contribution and market value in order, you should feel confident making the appointment and giving it a go.

3. Start a side hustle

‘Side hustle’ is such a buzz phrase, isn’t it? A few years ago we’d never even heard of one, now every man, woman and even child has one.

If you want to make more money, you should get one too. It’s extra income you can earn on the side of your regular gig, hopefully doing something you love.

Have a think about your hobbies, interests and expertise and I’m pretty sure you can come up with a list of possible earners.

4. Sell your stuff

Everyone – everyone – has a bunch of things they bought but no longer use. Some of us even have a bunch of stuff we bought and have never used…

It’s time to clear out the closets and make more money!

You can pile your things up and have a garage sale the old fashioned way, but it might be more profitable to sell your things online. Don’t think you can only sell the ‘big stuff’ online, either.

5. Invest your money

Sharemarket investing

Investing in the markets can feel very daunting, with so many of us not knowing where to start. So, start here: How can absolute beginners get started investing? Oh, and you’ll probably need this: A plain-English guide to mortgage jargon.

Property investing

Of course, it’s not all about the sharemarket. You can also make more money by investing in property. (Hot tip: you can do both!) Which is probably just as daunting if you’re just getting started, so here’s a quick guide: 6 simple steps to becoming a landlord.

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101 ways to save money and live a richer life