Savings hacks while you self-isolate

As share and property markets continue to dip, Australians are scouring the market for savings accounts and term deposits with the highest possible interest rates.

Although interest rates have hit record lows, many banks and other financial institutions have lifted the rates savers can earn on money held in certain accounts.

So it pays to do your research to find the best place to store your hard-earned cash. There’s a wide range of offers on the market, and banks are pulling out all stops to attract your dollars, so we’ve rounded up our top hacks for getting the best returns on your savings.

Lots of banks offer a special interest rate to new savers. So it’s worth checking out what different institutions provide so you can make sure your money attracts the highest possible rate.

Remember that the interest rate you earn will usually drop to a lower rate after the introductory period is over. So be sure to look for the longest introductory period if you want to turbo-charge your savings.

Term deposits don’t just vary in terms of the interest rate savers earn. There are one-month, two-month, one-year, five-year and even longer options. But the underlying principle is this: the longer the term deposit and the more you’re prepared to invest, the more you will earn. Term deposits also usually pay a higher rate of interest than savings accounts.

One thing to consider is that term deposits typically pay a fixed rate. So if interest rates rise down the track, you may be able to find a term deposit with a higher rate. That’s why savers sometimes split their funds over different term deposits with varying lengths. This means as one term deposit matures, you can re-invest the funds in an account that earns more.

It’s worth noting that a savings account might be a better option if you want your money on call. This is because you may have to pay a break fee to access your money early with a term deposit.

The major banks have recently lifted their headline term deposit and savings account rates by 0.5% on average. But it’s also worth checking out what digital and neobanks (online banks with no physical stores) can offer.

These types of banks don’t have the overheads of the big banks - such as having to pay for an extensive branch system or rent - which means they’re usually able to offer a higher interest rate.

Don’t forget to look beyond the headline interest rate when comparing your savings account or term deposit options. For instance, some banks will offer you more interest if you’re prepared to make a certain number of deposits into your savings account each year.

It’s also important to check out other features. Some accounts and term deposits charge a set-up fee, and others let you link to another account. Every account is different so make sure you understand the terms.

Most banks will also let you know when your term deposit is about to expire and give you options to roll over the funds into another deposit. It’s worth taking an active approach to rollovers and researching what’s in the market when your term deposit ends. Remember that your bank might automatically roll over your funds at the end of the term, meaning you won’t be on the best possible interest rate.