Home loan rates are up, but so are savings accounts! Is it time to switch?

Whenever the Reserve Bank of Australia (RBA) lifts the official cash rate, lenders and banks take it as a cue to hike their variable interest home loans, too. But while they’re normally a little slower to do the same with savings accounts, we’re finally beginning to see some welcome rises.

So if you’re stressing over the cost of housing finance and looking for ways to save, here are some amazing banking options to check out.

Term deposits

While no investment is 100% risk-free, term deposits make a pretty safe bet. Offered by most Australian banks and credit unions, a term deposit is basically a high interest savings account you agree not to touch or make withdrawals on for an agreed period of time. Afterwards, you get your money back with heckin’ high interest (unless the term rolls over – pay attention to the fine print!)

How does it work? Once you’ve found a term deposit offer you like, simply tuck a minimum sum of money away in the deposit for a locked-in term (usually between one month to five years), then watch it accrue interest at a fixed rate. This interest can be paid monthly or at the end of your term when your deposit “matures”. Typically the longer the term, the better the interest rate. 

Like any financial product, term deposits come with plenty of pros and cons, but if you have a nest egg you don’t mind not touching for a while, they can be a great investment opportunity.

Looking for the best term deposits? Check out the 2022 Mozo Experts Choice Term Deposits Awards.

For the highest rates in our database, head over to our monthly term deposit recap.

Offset accounts

An offset account is essentially a bank account linked to your mortgage. You can deposit your monthly salary, make debit transactions, and accrue interest like a normal savings and transaction account, but this one has a pretty useful perk. Any amount of money you have in your offset account cancels out a percentage of your mortgage and reduces the amount of interest you have to pay.

How does it work? Say you have $200,000 left on your mortgage and $50,000 in an 100% offset account. The bank will subtract the $50k from your mortgage and only charge you interest on the remaining $150,000. While it doesn’t save you from eventually repaying the other $50k, it does save you interest, which can really add up over long periods of time!

But what if your lender doesn’t offer an offset with your home loan? No worries: browse offers that do. If you find an option that works better for your needs, it could be time to refinance.

Looking for the best offset account home loans? Check out the offset category for the 2022 Mozo Experts Choice Home Loan Awards. 

Youth saver accounts

Maybe owning a house isn’t really on the cards at the moment because you’re still in school, learning to drive, or just being young and cute. Well good news: youth savings accounts often offer you extremely attractive interest rates. Huzzah!

How does it work? If you’re under 18, most banks will offer you a version of a ‘youth saver’ account with little to no provider fees and high bonus interest rates, provided you meet some monthly conditions (like a minimum deposit). Some banks will even offer these kinds of accounts to under 30s.

However, not every account out there is competitive, and some come with sneaky hidden catches like reverting to a lower interest rate after a year or even having crummier rates than regular savers. Be sure to read the terms and conditions when comparing options out there!

High interest savings accounts

These guys are the cream of the crop, worthy of a chef’s kiss of the highest order. High interest saving accounts prioritise interest rates above everything else, often in the form of bonus interest you can accrue over long periods of time given you meet certain conditions, like a minimum monthly deposit or transaction amount. 

How does it work? Depends on the account. Whenever choosing a high interest savings account, make sure to pay attention to not just the interest, but the terms and conditions, any hidden fees, and other perks you might want like ethical or green investment options. 

Neobanks

As their name suggests, pros and cons of neobanks in a helpful guide.

Found a better deal? Here’s how to switch bank accounts

Did you know you’re more likely to break up with your partner than your bank? It’s easy to settle into a routine, because let’s face it: finding a good deal can take a bit of work. But it’s actually surprisingly simple to switch to a new bank and can even be done in 4 easy steps. 

• Compare bank accounts.
  
• Open a new bank account.
  
• Change your regular payments.
  
• Close your old account.
  

Voila! And best of all, many banks will happily put in the leg work for your business. So be sure to compare what’s on the market and see if you can get a better deal. After all, you’re worth it.

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