Deposit that! A new approach to spending

Hear that? It’s the sound of people not spending money. It’s the sound of cash lying dormant in bank accounts, piggy banks and under matresses.

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 ‘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.