Money Hack: The savings account rort
Beat the banks at their own game by switching your savings account (constantly).
Most people have a savings account, but most people (like me) are lazy about it. They opt for the standard account offered as a companion to their transaction account (again, guilty) and don't think much about it, let alone actually know their interest rate.
However, banks will do anything to get you to switch your savings account to theirs. They want you to do it so badly that they'll offer you bonus interest when you bring your money across to them. And this is where the hack comes in.
The hack
Continually switch your savings account to take advantage of bonus interest rate offers. Many banks and credit unions offer a higher rate for the first few months after you open your savings account, provided you meet a few conditions. By staying until the bonus rate is over and then taking on another offer, you can ensure that your savings are earning a decent interest rate at all times.
Here's what to keep in mind:
- Conditions. Most bonus rate offers come with conditions that you must meet, such as making a minimum deposit each month, so make sure you're able to meet them before signing up.
- Withdrawal restrictions. Some bonus rates will only apply if you make no withdrawals, so avoid these accounts if you rely on your savings as a buffer.
- Time limit. Bonus rate offers are for a limited time only, so set yourself a reminder for when the offer ends so that you can switch your account.
- Fees. Some banks will charge you a fee to close your account. Make sure that the benefits of the bonus interest offer outweigh the cost of the fee.
- New customers only. Most offers are only available to new customers, so once you've gone through every bank once, you can't start your list over again. Lucky there are a few accounts to choose from (check out the link below to compare them).
finder money hacks is a bi-weekly roundup of the latest tips and tricks to improve your finances. Check back every Wednesday and Saturday for new hacks.
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