New legislation introduced this month means that online savings accounts are a less attractive offering for banks and many are cutting the rates offered on such accounts. Even if your savings are meagre, it’s worthwhile shopping around to see if you can get a better offer – a variance of as much as 0.5 per cent between some accounts can make a huge difference.
Banks are notorious for offering a higher interest rate to lure new customers, only to drop it significantly after a year or so. Complacency, or believing that the process of switching is too complex, often results in customers staying with the same bank for less return. However, as accounts are managed and applied for online, switching isn’t particularly difficult.
To see how a different interest rate can affect your savings, use the compound interest calculator at Moneysmart.gov.au.
For a comparison of the interest rates on offer for savings accounts, use a comparison site such as Savingsaccountfinder.com.au.