7 ways for savers to outsmart the falling interest rates

With savings account rates dropping consistently over the last year, one thing's clear - it’s not the best time to stash all your money in a savings account.

The average ongoing savings rate is at an all time low of 2.16%, down from 2.55% this time last year. While an obvious alternative to a savings account would be a term deposit, there are other ways to put your money to good use. We’ve got some useful tips on how to make sure you get good value out of your money.

1. Make the switch: Instead of settling for a low standard variable rate on your savings account after your great introductory offer ends, switch accounts every few months and take advantage of all the hot deals in the market. It’s actually a lot less complicated than what it sounds. You can easily set up an online bonus saver account and manage your money from the comfort of your own home.

2. Ditch the debt: There is just no point in piling up debt while your savings account remains flat. Pump any extra cash into reducing your debt. Unlike savings rates, credit card rates have increased over time. So stop spending on that totally avoidable credit card interest by switching to a 0% balance transfer deal.

3. Make multiple investments: It’s a good idea to diversify your investments by holding a varied portfolio that includes cash, equities, property and increased super contributions. This will increase your odds of earning a higher overall return on your money and will decrease your investment risk.

4. Offset your savings: Homeowners should take advantage of a mortgage offset account. If you deposit a typical salary into an offset account attached to a $500,000 mortgage, you can actually save at least $2,000 a year in interest. And the cherry on the cake is that since you’re not earning compound interest, you won’t be taxed on it.

5. Invest in shares: If you’re not shy of a little financial risk, try invest in shares. It makes sense to start with a small amount of $500 and go for a low cost online share trading platform to ensure broker fees don’t eat away too much of your investment. Once you get more comfortable with this form of investment, use monthly savings to regularly add new stocks.

6. Track the index: Exchange traded funds or index funds, make for an easier and low cost option to get instant diversification. This is a good platform if you are new to the stock market.

7. Look at a managed fund: Managed funds offer the chance to beat the index but do remember that they can come with higher fees, ranging from 0.5% to 2.5%. They particularly make sense for investors wanting to make ongoing contributions from their savings.