Friday, November 03, 2017

How to make 20% more interest on your savings.

Recently I asked my bank, the Bank of Queensland, to close off a term deposit early. I also asked them to reconsider the hefty 50% interest penalty, as that way they'd keep the reasonably sized term deposit. Naturally they weren't able to do anything. I find most banks can't really do anything so you need to work out their offers and decide what is best for you.

As a result of the Bank of Queensland's inability to look after their client, I started to get serious about looking around. It really made no sense the Bank of Queensland didn't consider my request as what they gained in the penalty is little compared to what they make. Losing the money meant they'd make nothing. In fact it ended up nearly all of the money parked in the Bank of Queensland could produce better returns elsewhere and that is what happened.

So how do you make 20% more interest on your savings?

You shop around.

Bank of Queensland is offering 2.45% for term deposits for 6 months. Other banks offer around 2.2%. These are term deposit accounts where you can't access your money without penalty until the end of the term.

I've found two online bank accounts which offer access to your money. One offering 2.95% and another offering 2.87%. Bank of Melbourne did offer an introductory honeymoon rate of 3% on a savings account, but that's since dropped to 2.8%. Some of the banks have special conditions (such as deposits each month or using their debit card) but usually it's fairly easy to meet their conditions. The best part is your money is accessible to you at any time and not tied up like term deposits.

Whilst interest rates on savings are pretty terrible at the moment, if you have savings, it really is worth shopping around. An extra 20% in interest is there for the taking and the money is better in your pocket.

A tool I wrote to help me determine whether it was worth shopping around is my Compare Term Deposit Rates calculator which can be found at The calculator enabled me to enter an amount, term and two rates. By entering two rates I could quickly see the difference the interest rates made. Sometimes when looking at short periods (under a month) it made little difference, but when looking at 3-12 months, the benefit could be quite good and worth the effort. Having an easy to use calculator certainly made it easier for me to make comparisons and then make informed decision on what to do next.

Kelvin Eldridge

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