Last month the Reserve Bank cut the official cash rate to 1.75%. While property owners were understandably stoked, it wasn’t such good news for savers with 46 lenders applying the 0.25% rate cut to their savings accounts – bringing the average rate down to just 2.08%.
So what can you do about the dire state of savings account rates? Follow these three tactics to rescue your savings…
1. Rate tart.
The concept of rate tarting is pretty simple. You take advantage of a great intro rate and when it reverts to an average one, you love them and leave them by moving your money to another competitive offer.
The best part is, right now some of the best deals can be found with savings accounts that have high rates for an introductory period. For instance, Rabodirect is offering 3.25% for the first 4 months, with its High Interest Savings Account.
Think rate tarting is for you? Check out our savings account hub to see some of the best rates now.
2. Lock away your savings.
Traditionally term deposit accounts, were known to have far lower interest rates than savings accounts but, how things have changed, as some of the best rates in the market can be found if you’re willing to lock away your cash for a period. For instance, right now ME’s offering a generous 3.30% for 6 months and 3.20% for 5 years.
The main reason to go for a term deposit is you’ll be protected against rate drops in the market as the interest rate is fixed. And just so you’re aware the RBA is tipped to slash the official cash rate to 1% in the coming months.
3. Invest in shares.
If you’re open to a slightly riskier savings alternative, you could also try your hand at the investment game, which is known to give you a higher return on your coin when compared to traditional methods.
New to investing in shares? Check out this article by David Kochie, which lists some of the strongest companies that offer a stable dividend yield. Quick tip: Many investors diversify their investments across multiple shares to bring down the risk of investing.
How will you rescue your savings from falling interest rates?