The Best Savings Account in Australia 2015

An article by GenX published 

at Melbourne Victoria Australia www.melbournevicaustralia.blogspot.com

Please do not reprint or republish in part or in any form.

INTRODUCTION

Generally, we would think that term deposits (also known as fixed deposits) would pay a higher interest rate compared to savings accounts. However, this is not necessarily the case in Australia!!!

Most banks in Australia, if not all, offer online savings account that pays interest ranging from 2.25% to 2.75% (Standard Variable Rate as of January 2015). And in order to attract you to deposit your money with them, the banks will offer additional Bonus Interest Rates of more than 1% for the first 3 to 4 months only. After the promotion period (3 or 4 months), you will end up earning the lower standard variable rate for life!!! 

For example:

ANZ Bank Online Saver

ANZ Online Saver offers 2.5% Standard Variable Rate plus 1.2% Bonus Interest Rate for the first 3 months. Therefore, the ANZ Online Saver account will earn you 3.7% interest rate for 3 months and then the interest rate for the Online Saver will revert to the Standard Variable Rate of 2.5% - which means you will be stuck at a lower interest rate for life!

Also please note - in order to sign up for the ANZ Bank Online Saver Account, you need an ANZ Everyday Banking Account. The ANZ Everyday Banking Account is NOT TRULY FREE, i.e. it imposes a monthly fee of AUD5 if you do not deposit at least AUD2000 monthly into it! So you may end up paying $60 a year for nothing if you do not deposit $2000 every month.

Commonwealth Bank Netbank Saver

Just like ANZ, Commonwealth Bank also offers a similar online savings account called NetBank which pays 2.5% Variable Interest Rate plus 1.2% Bonus Interest Rate for the first 3 months. So, just like ANZ, your funds will only earn you a miserable 2.5% interest rate starting from the fourth month and for the rest of your life.

And in order to sign up for the Commonwealth Bank NetBank Saver, you also need to sign up for a Commonwealth Bank Everyday Account which is NOT TRULY FREE; because just like in ANZ’s case, you need to deposit AUD2K monthly or else you will be penalized and charged a monthly fee. 

Many people sign up for the account(s) above because ANZ Bank and Commonwealth Bank have branches and ATMs everywhere making it very convenient.

However, from both examples above, it can be concluded for long term savings, you should avoid this type of savings accounts and instead look for savings accounts that give you high interest rate starting from the very first day you sign up for the account and for the rest of your life. By doing so, it will not only earn you more money but save you time and the hassle of moving your funds from bank to bank to earn higher interest rates.

HOW TO AVOID BEING IMPOSED MONTHLY FEE ON YOUR EVERYDAY TRANSACTION ACCOUNT IF YOU ARE UNABLE TO DEPOSIT $2000 A MONTH

Now, for those of you who are unable to deposit $2000 a month into your Smart Access or Complete Access Commonwealth Bank Everyday Transaction account to avoid being penalized and imposed a fee, here is a tip for you.

Say you have the following amount in your Commonwealth Bank Accounts:

Smart or Complete Access - $33.18

NetBank - $618.00

STEP 1

Transfer $500 from Netbank to your Smart/Complete Access Account

STEP 2

You banking accounts will now show:

Smart or Complete Access - $533.18

NetBank - $118.00

Transfer $500 from your Smart/Complete Access Account back into Netbank Account.

Once the $500 is credited into your Netbank account, immediately repeat Steps 1 and 2 above another 3 times and you would have “deposited” $2000 into your Smart/Complete Access account; thus fulfilling the $2000 monthly deposit requirement into the Everyday Transaction Account to avoid being penalized and imposed the monthly fee.

Repeat the above tip/method every month and you’ll get to enjoy FREE EVERYDAY TRANSACTION account with Commonwealth Bank throughout the year :)  

NAB – TRUE FREE BANKING

Before I proceed any further, I would like to touch on National Bank Australia (NAB) banking accounts.

NAB Classic Banking Account is an Everyday Transaction Account which is FREE FOR LIFE, i.e. no minimum deposit and no monthly account fee whatsoever, unlike ANZ Bank Everyday Account and Commonwealth Smart/Complete Access Account where you need to deposit $2000 a month to avoid being penalized.

Once you sign up for NAB Classic Banking Account and have registered for NAB Online Banking, you can then sign up for NAB iSaver Online Savings Account.

NAB iSaver pays 2.5% standard variable rate PLUS 1% Bonus Interest for 4 months. Therefore, the funds in your NAB iSaver will earn you 3.5%. Now, this amount is less than the 3.7% interest rate offered by ANZ Bank and Commonwealth Bank shown in my earlier example. So why the heck am I telling you about NAB iSaver? Read on and you may just learn another thing or two.

Reason 1 – NAB Classic Banking Account (Everyday Transaction Account) is FREE FOR LIFE without you needing to deposit a single cent into the account.

Reason 2 – You need NAB Classic Banking Account to sign up for NAB iSaver Account.

Reason 3 and the most important of all – you can sign up for as many NAB iSaver Accounts as you wish!!!

In my earlier examples for ANZ and Commonwealth Bank Online Savings Accounts, I have highlighted to you that you will end up with low interest rate after the third month.

However, NAB allows you to open a new NAB iSaver Savings Account online as and when you desire, which means you get to continuously earn higher interest rates. Here is an example:

1. Say you sign up for NAB iSaver on 30^th December 2014 and the account was approved on 2^nd January 2015.

2. You then deposit AUD5,000 into the NAB Classic Banking Account (which pays 0% interest) and then immediately transfer the AUD5K into your new NAB iSaver account to start earning 3.5% interest rate for the next 4 months. 

3. Knowing that your NAB iSaver Account interest rate will revert to the Standard Variable Rate after the bonus period of 4 months. What you should do is go sign up for another NAB iSaver account sometime towards the end of April, say on 30^th April 2015.

4. Your new NAB iSaver should be approved after couple of days, say it was approved on 2^nd May 2015, i.e. new account shown in your NAB Online Banking.

5. You will then transfer ALL the money in your initial NAB iSaver account to the NAB Classic Banking Account. And immediately then perform another transfer for the NAB Classic Banking Account into the NEW NAB iSaver account to continue earning higher interest rate :) 

6. Repeat Steps 3, 4 and 5 every four months and you will get continuous higher interest rate throughout the year. If you had left your money in the initial NAB iSaver account, you would be earning 1% less in interest rate compared to the new iSaver account.

INTRODUCING BANKWEST HERO SAVER SAVINGS ACCOUNT – The best and amongst the highest interest rate savings account in Australia.

Like I mentioned earlier, we would think that Term Deposit account would pay a higher interest rate compared to Savings Account. Well, Bankwest’s HERO Online Savings Account interest rate of 4% (as of January 2015) is higher than Term Deposit Interest Rates offered by most banks, if not all, for tenures less than 12 months!!! The only condition to earn the 4% interest rate is you must deposit $200 a month into the account and make no withdrawals. And best of all, interest is credited monthly into the account, which means you get to earn interest on interest paid/credited monthly.

However, in order to sign up for Bankwest’ Hero savings account, we have to go get a Bankwest Everyday Transaction Account. And Bankwest offers several types of Everyday Accounts, e.g. you can earn Qantas Points, Reward Points and even an Everyday Account that pays 3% interest rate. Yes! Bankwest offers an Everyday Transaction Account that pays 3% interest rate on balances up to $5000.

I will now show you what accounts to open with Bankwest to optimize your earnings:

1. HERO Everyday Transaction Account

This account pays you 3% interest rate for balances up to $5000. Most banks in Australia offer you 0% interest rate for their Everyday Account. Heck, the 3% interest rate is even better than the Standard Variable interest rate offered by ANZ Online, CommBank NetBank and NAB iSaver I mentioned above!

You will be issued a MasterCard Debit Card where you can withdraw cash at all Bankwest and CommBank ATMs for FREE.

The only set back is that you need to deposit $2000 a month into the HERO Everyday Account or else you will be imposed a monthly fee (like in ANZ’s and CommBank’s case).

2. TELENET SAVER Online Savings Account

Sign up for this online account. Just like most banks, it offers Bonus Interest Rate (1.25%) for the first 4 months and then reverts to Standard Variable Rate (2.5% as of 1^st January 2015). This account is FREE where there is no minimum deposit requirement.

You may be asking – why need this account if it pays standard variable interest rate like the examples mentioned above when I have said to avoid this type of account? You see, this account will not penalize you in anyway if you perform a withdrawal and you will understand why this is extremely important very soon.

3. HERO SAVER Online Savings Account

This account pays you interest rate of 4% p.a. credited monthly for balances up to $250k on condition you deposit $200 a month. If you do not deposit $200, on any particular month, you will only earn 0.1% 

So for the 3 types of accounts above, I will now show you how to optimize earning higher effective interest rate compared to other banks online savings account in Australia.

Say you have AUD103,000 to deposit and you are thinking of going with a term deposit that pays 3.3% interest rate for 6 months tenure. This means you will earn interest totaling AUD1,699.50 ($103,000 x 3.3% x 6months/12months). Therefore, adding the Principal Sum and the Interest Earned, you would have $104,699.50.

 

Term Deposit vs Bankwest HERO EVERYDAY, TELENET and HERO SAVER COMBINATION

Now remember, we have to deposit $2000 into the HERO EVERYDAY TRANSACTION account to avoid being charged monthly. This is where the TeleNet Account comes into play. Remember the Commonwealth bank case where I taught you to transfer $500 between the Everyday and Savings Account so that you meet the $2000 deposit requirement? Same thing here.

Balance in Accounts as of 1^st January 2015 (may have to deposit on 31^st December 2014)

Bankwest HERO Everyday Transaction Account ( 3% interest rate) – See Note 1

Bankwest TeleNet (3.75% for first 4 months and then 2.5%) – Deposit $3000

Bankwest HERO SAVER Online Saving Account (4% interest rate) – Deposit $100,000

Note 1 – Deposit $3000 into HERO Everyday Transaction Account and then immediately transfer to TeleNet to earn 3.75% interest rate.

Balance as of 1^st February 2015 (end of first month)

Bankwest HERO Everyday Transaction Account ( 3% interest rate) – See Notes 2

Bankwest TeleNet (3.75% for first 4 months and then 2.5%) – Balance $2800

Bankwest HERO SAVER Online Saving Account (4% interest rate) – Balance $100,549.27

Notes 2

a. You will earn approximately $9.55 ($3000 x 3.75% x 31days/365days) from the $3000 deposit in Telenet for the month of January 2015.

b. Transfer $2009.55 from TeleNet into the HERO Everyday Transaction Account to satisfy the $2000 deposit requirement to get the monthly fee waived.

c. Transfer $209.55 from the HERO Transaction Account to HERO SAVER account to satisfy the minimum $200 deposit requirement.

d. You will now have $1800 balance in your HERO Transaction Account. Transfer the entire $1800 back to TeleNet to earn higher interest rate of 3.75%

e. You will also earn 4% interest on the $100,000 deposited in your HERO SAVER Account for the month of January, i.e. $339.72 ($100,000 x 4% x 31days/365days). Adding this interest earned plus the amount transferred from the HERO Transaction Account, your HERO SAVER account should now show a balance of $100,549.27

Balance as of 1^st March 2015 (end of second month)

Bankwest HERO Everyday Transaction Account ( 3% interest rate) – See Notes 3

Bankwest TeleNet (3.75% for first 4 months and then 2.5%) – Balance $2600

Bankwest HERO SAVER Online Saving Account (4% interest rate) – Deposit $101,065.85

Notes 3

a. You will earn approximately $8.05 ($2800 x 3.75% x 28days/365days) from the $2800 deposit in Telenet for the month of February 2015.

b. Transfer $2008.05 from TeleNet into the HERO Everyday Transaction Account to satisfy the $2000 deposit requirement to get the monthly fee waived.

c. Transfer $208.05 from the HERO Transaction Account to HERO SAVER account to satisfy the minimum $200 deposit requirement.

d. You will now have $1800 balance in your HERO Transaction Account. Transfer the entire $1800 back to TeleNet to earn higher interest rate of 3.75%

e. You will also earn 4% interest on the $100,549.27 in your HERO SAVER Account for the month of February, i.e. RM308.53 (100,549.27 x 4% x 28days/365days). Adding this interest earned plus the amount transferred from the HERO Transaction Account, your HERO SAVER account should now show a balance of $101,065.85

Balance as of 1^st April 2015 (end of third month)

Bankwest HERO Everyday Transaction Account ( 3% interest rate) – See Notes 4

Bankwest TeleNet (3.75% for first 4 months and then 2.5%) – Balance $2400

Bankwest HERO SAVER Online Saving Account (4% interest rate) – Deposit $101,617.47

Notes 4

a. You will earn approximately $8.28 ($2600 x 3.75% x 31days/365days) from the $2600 deposit in Telenet for the month of March 2015.

b. Transfer $2008.28 from TeleNet into the HERO Everyday Transaction Account to satisfy the $2000 deposit requirement to get the monthly fee waived.

c. Transfer $208.28 from the HERO Transaction Account to HERO SAVER account to satisfy the minimum $200 deposit requirement.

d. You will now have $1800 balance in your HERO Transaction Account. Transfer the entire $1800 back to TeleNet to earn higher interest rate of 3.75%

e. You will also earn 4% interest on the $101,065.85 in your HERO SAVER Account for the month of February, i.e. approximately $343.34 (101,065.85 x 4% x 31days/365days). Adding this interest earned plus the amount transferred from the HERO Transaction Account, your HERO SAVER account should now show a balance of $101,617.57

Balance as of 1^st May 2015 (end of fourth month)

Bankwest HERO Everyday Transaction Account ( 3% interest rate) – Balance $2200

Bankwest TeleNet (2.5% - Bonus Interest Period Over) – Balance $0 See Notes 5

Bankwest HERO SAVER Online Saving Account (4% interest rate) – Deposit $102,159.05

Notes 5

a. You will earn approximately $7.40 ($2400 x 3.75% x 30days/365days) from the $2400 deposit in Telenet for the month of April 2015.

b. Transfer $2407.40 from TeleNet into the HERO Everyday Transaction Account to satisfy the $2000 deposit requirement to get the monthly fee waived.

c. Transfer $207.40 from the HERO Transaction Account to HERO SAVER account to satisfy the minimum $200 deposit requirement.

d. You will now have $2200 balance in your HERO Transaction Account. This time DO NOT transfer any amount to the TeleNet account as it will now revert to Standard Variable Rate where the interest rate is only 2.50%

e. You will also earn 4% interest on the $101,617.57 in your HERO SAVER Account for the month of April, i.e. approximately $334.08 (101,617.57 x 4% x 30days/365days). Adding this interest earned plus the amount transferred from the HERO Transaction Account, your HERO SAVER account should now show a balance of $102,159.05

Balance as of 1^st June 2015 (end of fifth month)

Bankwest HERO Everyday Transaction Account (3% interest rate) – Balance $2000

Bankwest TeleNet (2.5% - Bonus Interest Period Over) – Balance $0 See Note 6

Bankwest HERO SAVER Online Saving Account (4% interest rate) – Deposit $102,159.05

Notes 6

a. You will earn approximately $5.60 ($2200 x 3% x 31days/365days) from the $2200 deposit in HERO Every Transaction Account for the month of May 2015.

b. Transfer $2000 from HERO Everyday Transaction Account to TeleNet. And then immediately transfer back $2000 into the HERO Everyday Transaction Account to satisfy the $2000 deposit requirement to get the monthly fee waived. You do not need to maintain any money in the TeleNet account which pays lower interest rate compared to the HERO Transaction Account.

c. Transfer $205.60 from the HERO Transaction Account to HERO SAVER account to satisfy the minimum $200 deposit requirement.

d. You will now have $2000 balance in your HERO Transaction Account.

e. You will also earn 4% interest on the $102,159.05 in your HERO SAVER Account for the month of May, i.e. approximately $347.06 (102,159.05 x 4% x 31days/365days). Adding this interest earned plus the amount transferred from the HERO Transaction Account, your HERO SAVER account should now show a balance of $102,711.71.

Balance as of 1^st July 2015 (end of sixth month)

Bankwest HERO Everyday Transaction Account ( 3% interest rate) – Balance $2004.93

Bankwest TeleNet (2.5% - Bonus Interest Period Over) – Balance $0

Bankwest HERO SAVER Online Saving Account (4% interest rate) – Deposit $103,049.39

Notes 6

a. You will earn approximately $4.93 ($2000 x 3% x 30days/365days) from the $2000 deposit in HERO Every Transaction Account for the month of June 2015.

b. You will also earn 4% interest on the $102,711.71 in your HERO SAVER Account for the month of June, i.e. approximately $337.68 (102,711.71 x 4% x 30days/365days). Adding this interest earned, your HERO SAVER account should now show a balance of $103,049.39.

Therefore, at the end of 6 months, you will now have a total of $105,054.32 ($2004.93 HERO Transaction Account plus $103,049.39 HERO Saver) compared to $104,699.50 if you had deposited the $103,000 into a 6 months term deposit earning 3.3% interest rates. That’s $354.82 FREE Money more with the Bankwest HERO Transaction, TeleNet and HERO Saver combination.

You can continue earning 4% interest for months to come. Just repeat the step I shown where you just need to transfer a total of $2000 between the HERO Transaction and TeleNet accounts (more than 1 transfer as the balance in the HERO Transaction account will reduce by at least $200 every month as this said amount need to be transferred into the HERO SAVER account) and also to deposit $200 into the HERO Saver account monthly.

ONE VERY IMPORTANT THING TO TAKE NOTE – IT IS IMPERATIVE THAT YOU DO NOT WITHDRAW ANY MONEY FROM THE HERO SAVER ACCOUNT AT THE END OF THE MONTH AS YOU WILL THEN ONLY EARN 0.1% INTEREST RATE FOR THE AMOUNT IN THE HERO ACCOUNT FOR THAT PARTICULAR MONTH.

For example, if you had withdrawn your money in the HERO Saver account on 30^th June 2015, you would then not have earned the interest of $337.68 from the $$102,159.05 in the HERO Saver account (as of 1^st June 2015) for the entire month of June!!! That is why you should only withdraw money only at the beginning of the month from accounts that penalize you if you make any withdrawals.

For the Bankwest HERO Transaction, TeleNet and HERO Saver combination – say you need to use the funds in the HERO Saver account on 15^th June 2015. What you should do is withdraw ALL the money from the HERO Saver account on 1^st June and deposit it into TeleNet Account. So that you can continue earning 2.5% p.a. interest rate from 1^st June to 14^th June for the amount deposited in TeleNet. If you only withdraw the money from the HERO Saver account on 15^th June, you would end up earning close to nothing, i.e. 0.1% interest rate) from the money sitting in HERO Saver account. And come 1^st July 2015, whatever money left in the TeleNet can then be transferred into the HERO Saver account to continue earning 4% p.a. interest rate.  

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