Deposit that! A new approach to spending
As a country, we aren’t spending enough on useless junk. Retailers are aghast. To make matters worse, the money we are spending is going overseas – testament to the red-hot Aussie dollar.
The banks know this, and they have a plan. They want you to take your cash and stash it with them, and they want to pay YOU for the service – oh what a topsy-turvy world. Yes, savings accounts and term deposits are truly the staple of any money savvy post-recessionista. So which should you choose?
Let’s start with high interest savings accounts, where there are a couple of standouts well worth looking at. First off, BankWest's Regular Saver has no monthly fee and a market leading rate of 7.00%. It's an amazing rate, however you can't make any withdrawals and you can only deposit up to $500 a month.
If you can't stick to those parameters, UBank's USaver is a great option. It's got a fantastic interest rate of 6.51% as long as you set up an automatic savings plan of at least $200 a month, 6.01% if you don't. There's no monthly fee, you can withdraw and deposit as much as you like and there are no balance conditions.
If you’re patient - or terribly impatient and need your money locked away from yourself – a term deposit might be the way to go. To get a rate of 6.00% or over you'll have to invest your money for a minimum of 6 months, and to beat the USaver, you’ll need to say bye-bye to your cash for a year at least.
So a savings account or a term deposit? In the end, it all depends on what type of saver you are. A savings account lets you constantly add to and withdraw from your balance as necessary whereas a term deposit requires you to effectively â€˜set and forget the lump of cash you're depositing.
Whilst savings accounts offer greater access and flexibility, term deposits offer greater interest, particularly if you're willing to opt for a long-term option. In the end it may came down to will power. If you are habitually poor at saving, a term deposit will effectively imprison your cash - well away from your impulsive retail desires.