Why your savings account should be on your spring clean list this year

When it comes to your finances, being a good saver is crucial. 

And what goes hand-in-hand with being a good saver? A high interest savings account. 

So if you are currently signed up with a provider that offers low interest rates (or none at all), it’s time to put your savings account on your spring clean list! 

First off, what is a high interest savings account? 

As the name suggests, a high interest savings account is a type of savings account that offers an interest rate that is considered ‘high’ in the current market. 

This is usually a combination of a base interest rate and a special bonus rate or intro rate. In most cases, savers receive a bonus rate when their balance grows by a certain amount each month and/or they make a certain number of purchases on their connected transaction account. 

“The bonus interest rate is an extra interest rate offered in certain circumstances and  in addition to the base rate,” says Virgin Money Australia’s general manager of lending, cards and deposits, Johnny Lockwood. 

“This may be either as an introductory bonus rate for a limited time (also known as a honeymoon rate) or as a ‘conditional rate’ that some account-holders may qualify for by meeting particular requirements.” 

But the truth is, savings account rates are pretty low at the moment. In fact, right now on the Mozo database the average bonus rate sits at a low 0.59% while the average intro rate sits at a slightly higher 0.62%.

Meanwhile, amongst the big four banks, the average bonus rate on the Mozo database is currently 0.31% and the average introductory rate is 0.32%. So, if you’ve stuck with the big four for your savings, it may be time to wipe them away. 

Lockwood explains that although rates are at an all-time low right now, it’s worth looking around for a high-interest savings account to get the most out of your savings. 

“It’s really important to do your research when looking for high interest savings accounts as there are a number of things to consider. One feature is compound interest - on a high interest savings account this can make a big difference over the long term,” he says.  

Want to compare savings account options now? Check out these top products below!

How much should I be saving each week?

Unfortunately, there is no set answer here. Your weekly savings can be influenced by a number of things like your income, your regular expenses, unexpected expenses and of course, what it is you’re saving for. 

In saying that, according to the head of Rabobank online savings, Bede Cronin, Rabobank’s savings customers save an average of around $350 to $500 each week. But he also explains that that’s not set in stone for everyone, and it’s crucial to understand your own situation. 

“I would say that a good starting point is to understand how much of your savings you need to access immediately compared to what you can safely lock away for a period of time in order to generate a higher rate of interest,” Cronin says.

“And remember that even a small amount saved regularly can have a big impact over the years.” 

And while having a solid weekly savings plan is important, it’s also crucial to have the right financial tools behind you. 

“Our annual Financial Health Barometer research^ has shown that Australian savers often have their savings sitting in their transaction account earning zero interest,” Cronin says. 

“However the benefit of high interest savings accounts is having peace of mind that your money is working for you by collecting a better interest rate and not paying any fees – rather than just leaving them in a transaction account. You can reach your savings goals faster by saving in an account that works best for you.” 

Why is it important to be a good saver? 

Developing good financial habits is important, and being a good saver is one of the most crucial. 

Lockwood says that no matter whether you’re saving for a house, car, wedding or to splurge at a fancy restaurant, it’s a fantastic feeling when you hit your personal savings goals. 

“Understanding more about your income and expenses, and setting affordable savings goals over a set period of time can be really rewarding,” he says. 

“It gives you a great sense of accomplishment and financial security watching your savings balance go up every month and knowing you are closer to seeing your goal become a reality.”  

Meanwhile, Cronin says that although current savings rates are low, regularly putting away money in a high interest savings account can see your dollars go further.

“Being a good saver can mean different things to different people, but I think overall it all comes down to taking control of your finances and creating healthier habits around money,” he says

“For example, it could be setting yourself a monthly budget that could help you curb impulse spending, setting a weekly savings target to reach your long term goal of having a nice nest egg for when you need it, or saving for that overseas trip you always wanted to go on (when the borders open of course).” 

Looking to find out more about your savings accounts options? Jump over to our savings account hub for all the info you need! 

^The 2020 Rabobank Food Waste Report is part of Rabobank’s annual Financial Health Barometer (FHB), surveying over 2,395 financial decision makers aged between 18 and 65. The survey now in its tenth year polls attitudes and behaviours towards saving, debt, farming, food production and food waste. Results are weighted by gender, age and location according to statistics from the Australian Bureau of Statistics.