Wednesday, August 18, 2010

Maximising interest on your savings

It really pays to move your savings around. Those who are complacent by leaving their savings in a basic transaction account - the banks truly love you. They share the love with you by paying you a lousy 0.01% interest rate per annum.

It's been a while since I've looked around to see which bank is offering the best interest rate. If you don't need your money urgently or anytime soon, it may be more ideal for you to invest your funds in a term deposit. Because I intend on using my funds pretty soon for other purposes, the best thing for me to do is invest it into a high interest account. Flexibility to transfer funds in and out is essential for me at this point in time.

Typically, an online account with minimal human interaction will offer the best yield.
The more a bank can computerise their interaction with you, the less staff they need to hire and the less they need to spend on providing services, the higher the rates on offer. Pretty much a win-win situation for both party.

So after having researched who was offering what, I opened up an account with UBank. I first saw their advert in the SMH and thought...sounds dodgy...probably something dodgy...until I saw the smaller font under their name 'backed by NAB.' NAB is one of our big four banks so that sounds pretty credible. Still, everything should be investigated first.

I went to NAB's site and read up on the UBank initiative of theirs. It is pretty much NAB dressed in Green and trying to corner the online-high-interest-rate chasers. Er...that means me! :) Anyway, I have now opened up my account, it took about10-15 minutes to fill out the forms online and you will need verifying documents of course (Medicare, Tax File Number, Passport number etc). CBAs lousy offering of 4.5% pa pales in comparison to UBank's 6.01%pa variable interest rate. They both compound monthly.

UBank is structured almost like ING Direct. However, ING has been resting on their laurels. What are the best features to look for? High interest, no-fee savings account, bonus interest (total interest rate of 6.51%pa) if you really want to setup the Automatic Savings Plan (which is a pita and takes approximately 4 days before the funds are available).

I used to bank with Bankwest but their high interest is only temporary nowadays. Most other banks have high interest teaser rates but after 4-6 months they revert to rates that are pretty lame. Not to mention, I've been trying to cancel my Bankwest account for almost a year now, but they seem reluctant to let go! Crazy. I still get statements from them and my online banking is still operational despite sending them two cancellation requests by writing and calling them up.
Why should anyone remain loyal to their bank when their bank doesn't care about loyalty. Anyway, UBank are so confident in their interest rate that they even have a table of their competitors latest offerings . How convenient.

If you're looking for the banks that offer the highest interests, see the table at the beginning of this post.

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