Did you know that the general consumer banks (Westpac, ANZ, National, Commonwealth, St George etc) rely on their customers not to be smart with their money?
All banks have some very smart people working for them in product development and marketing. Their aim is to create products like savings accounts and home loans that make as much money as possible for them and give their customers as little back as possible.
It is the job of the smart marketing people at the bank to make the saving accounts look really good when they are actually usually crap products.
What makes a good savings account is:
- interest earnt daily on all the money in it – not just what’s after the first $1,000 but ALL of it!
- good interest paid on all of it – say 5% – not tiered with 1% on the first $1000, 2% on the $2,000 – $4,999, and 3.5% on the rest – but 5% (at least) on ALL of it.
- 24 hour access to the funds – not restricted with time limits on it like termed deposits. Term deposits should offer much more than 5% with their restrictions.
- Even cheque book access is possible with these savings accounts.
- Interest paid monthly on all money in the account
- Minimal fees and charges to the account – this is because the financial institition is using the money being saved in these accounts to earn more income that the interest they pay you. For example, they should earn 9 – 12% on the money being saved. They pay you 5% interest and they make profit on the difference 4 – 7%.
If a savings account fails any of these key points then you can do better, you can easily have a decent and proper savings account that gives you excellent returns on cash savings with very little cost to you.
Banks such as the established and successful Macquarie Bank with the Cash Management Trust offers 5% interest on all funds in the account, cheque book access, online access, interest paid monthy – all the appropriate features for a good savings account.
ING and Bank West also have excellent savings accounts and are online as well.
So don’t let the consumer banks rip you off – be informed and explore.
And as for regular banking accounts – seriously consider and go exploring the credit unions – they are excellent, especially the industry ones.
Happy exploring and reward the businesses that respect their customers!