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actyourwageToday I had a salutory lesson. I was just viewing articles in my local paper online and it had a link: "Compare savings accounts!" kind of thing.
I tend to transfer money that I'm not intending to spend in the next week out of my bank account into a linked internet savings account. It works for me--stops me spending money I need to spend on bills, puts any excess money in a place where I can't get to it easily for impulse spending. I can access it by two business days at the outside and it provides me with a bit of a buffer. So I'm all set, right?
Banks rely to a large extent on both customer loyalty and inertia to keep your business with them. The thing is, switching isn't that hard or stressful. Let me be perfectly clear: banks make money off you. Every account you have with money in it, they're making interest over and on top of any interest they pay to you. They have a perfect right to make money--and you as a customer have a perfect right to assess their services and take your business elsewhere if you can get a better deal. Don't let them rattle you. I can provide a number of helpful links for Aussies, at least, who wish to switch bank accounts (just ask in the comments).
What the hell. I was bored. I clicked on the link to evaluate savings accounts.
I was surprised to see that the product I had my money with WASN'T among the top-rated for interest rates. The link also rated the fees. There were other accounts that charged no fees, which is a major drawcard for me.
So, I went to the site of the bank (uBank) in question and read their product disclosure statement (PROTIP: always read these. And print them out and save them. You can quite often discover some nasty little surprises in the fees). It didn't have any of the things that set off warning bells in my head: there were no "If you transfer money out, you lose any interest for the month". There were no fees.
The interest rate was 0.12% higher even than the promotional rate that ING offers. And I can get an additional .10% interest by setting up a regular savings plan. Their regular rate is 1.42% above my current savings account. This doesn't seem like much, but for 20 minutes of my time and the ID I carry in my wallet, given that I usually have a balance of a couple of hundred in there, that's an extra 20 cents (approximately) a month.
In addition to this, they have some nifty goal-setting features that allow you to set a target that you're saving for and calculates the minimum monthly payment with the current interest rate to reach the goal. It's not perfect, but I am in favour of visual representations of goals. The only reason I've kept up such high payments on my credit card is because I have a progress tracker which lets me see how much debt I've cleared. Especially if your goal is a medium to longterm one, then keeping up motivation for sustained effort is difficult.
It doesn't sound like much, but every little helps. I guess the take-home message is--pay attention.
Strategies I have to help me do this:
Starting from now, I have a day every month when I go through and check that the financial products I have best suit my needs. I've set an alarm on my calendar. These needs are:
Everyday account
-No account-keeping fees.
-No fees for withdrawing money via ATMs
-Unlimited ATM and EftPOS transactions
Savings account
-No account keeping fees
-Highest interest rate available
-No minimum balance
-No penalties for withdrawing or not depositing money
First Home Saver Account
This is a fantastic product that the Australian government has made available for Aussie first home buyers. It has an interest rate of 17% on the first $5000 a year, interest is only taxed at 15% rather than 30% and there are no fees. The bank that provides it may also pay you additional interest
-Highest bank interest rate
What features do you need? Do you have a strategy that helps you keep track of what product is the best for you?
I tend to transfer money that I'm not intending to spend in the next week out of my bank account into a linked internet savings account. It works for me--stops me spending money I need to spend on bills, puts any excess money in a place where I can't get to it easily for impulse spending. I can access it by two business days at the outside and it provides me with a bit of a buffer. So I'm all set, right?
Banks rely to a large extent on both customer loyalty and inertia to keep your business with them. The thing is, switching isn't that hard or stressful. Let me be perfectly clear: banks make money off you. Every account you have with money in it, they're making interest over and on top of any interest they pay to you. They have a perfect right to make money--and you as a customer have a perfect right to assess their services and take your business elsewhere if you can get a better deal. Don't let them rattle you. I can provide a number of helpful links for Aussies, at least, who wish to switch bank accounts (just ask in the comments).
What the hell. I was bored. I clicked on the link to evaluate savings accounts.
I was surprised to see that the product I had my money with WASN'T among the top-rated for interest rates. The link also rated the fees. There were other accounts that charged no fees, which is a major drawcard for me.
So, I went to the site of the bank (uBank) in question and read their product disclosure statement (PROTIP: always read these. And print them out and save them. You can quite often discover some nasty little surprises in the fees). It didn't have any of the things that set off warning bells in my head: there were no "If you transfer money out, you lose any interest for the month". There were no fees.
The interest rate was 0.12% higher even than the promotional rate that ING offers. And I can get an additional .10% interest by setting up a regular savings plan. Their regular rate is 1.42% above my current savings account. This doesn't seem like much, but for 20 minutes of my time and the ID I carry in my wallet, given that I usually have a balance of a couple of hundred in there, that's an extra 20 cents (approximately) a month.
In addition to this, they have some nifty goal-setting features that allow you to set a target that you're saving for and calculates the minimum monthly payment with the current interest rate to reach the goal. It's not perfect, but I am in favour of visual representations of goals. The only reason I've kept up such high payments on my credit card is because I have a progress tracker which lets me see how much debt I've cleared. Especially if your goal is a medium to longterm one, then keeping up motivation for sustained effort is difficult.
It doesn't sound like much, but every little helps. I guess the take-home message is--pay attention.
Strategies I have to help me do this:
Starting from now, I have a day every month when I go through and check that the financial products I have best suit my needs. I've set an alarm on my calendar. These needs are:
Everyday account
-No account-keeping fees.
-No fees for withdrawing money via ATMs
-Unlimited ATM and EftPOS transactions
Savings account
-No account keeping fees
-Highest interest rate available
-No minimum balance
-No penalties for withdrawing or not depositing money
First Home Saver Account
This is a fantastic product that the Australian government has made available for Aussie first home buyers. It has an interest rate of 17% on the first $5000 a year, interest is only taxed at 15% rather than 30% and there are no fees. The bank that provides it may also pay you additional interest
-Highest bank interest rate
What features do you need? Do you have a strategy that helps you keep track of what product is the best for you?
(no subject)
Date: 2010-01-27 01:47 am (UTC)I have some money in a bank account with ING Direct, which I keep there so that it isn't whim-accessible. But, according to this link, the interest rate between it and the highest one just isn't worth the effort of moving funds:
http://www.money-rates.com/savings.htm
Especially considering that I haven't had any problems with ING Direct for the years I've had the account!
(no subject)
Date: 2010-01-27 02:17 am (UTC)I know. It's a fabulous product, but given that an average 2 bedroom home here will set you back $300 000.00 it's kind of needed. There are all kinds of conditions (must deposit a minimum of $1000 a year for four years, must have the account for over four years, you can only spend it on a home deposit) that mean it's not for everyone but if you're in my situation it's great.
ING direct is fantastic. They're what I have been using--it's just with that extra percent of interest for the same amount, it's worthwhile for me. But I can and will (and have! What I love about it is that the Financial Obudsman charges the bank to investigate the complaint, whether it's found justified or not. And if it's found to be justified, which it has been every time for me, the bank not only refunds my money but gets hit with a fine) complain to the authorities if a bank screws me over. uBank is new, but they are backed by one of the Big 4 who essentially hold a monopoly on the banking market here. :S I'll keep a close eye on my balance and see how it goes.
I had a quick look at the other bank accounts the link you gave linked to. IMO, they wouldn't be suitable for other reasons--limited to 6 financial transactions per statement before they start charging fees? Or a minimum balance of $1500? >:( I find that I have to transfer expenses out the day before they occur. That way I leave the money where it's earning interest for longest and I can't spend it on other things. You may find that things are different for you, though.
(no subject)
Date: 2010-01-27 02:25 am (UTC)And I guess making 20 extra cents a month isn't worth the extra time not just transferring the account that one time, but monitoring to making sure I always stayed ahead of the pack--I'd save much, much more by just telling myself no for things I want. I could see doing checking once every few months or so, just to make sure I wasn't at the bottom of the pack. Maybe I'd need more savings before I felt like it was worth it! Right now, my family's been through some pretty tough times, so my savings are pretty much to the level where I could cover an moderate emergency for myself but not much else.
(no subject)
Date: 2010-01-27 02:42 am (UTC)If I run a cost/benefit analysis of it as a proportion of my hourly wage, no, it's not worth it. (I get paid around 30c a minute or so.) But given that I do this for fun, at a time when I usually wouldn't be earning anything--eh. It's an extra 20c. Not worth it for everyone, but worth it for me. Apart from anything else, it's a psychological tool. Even getting a tiny reward like this helps me keep motivated to keep monitoring my other bank accounts--before I switched banks, I was losing approximately $12 a month just in bank fees.
Good on you for having savings! I... haven't, as yet. Every time I try, something comes up, but so far I've been able to meet emergency vets bills AND get my credit card down. I'm really looking forward to not having credit card debt, that will free up my finances so much.