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November 23 2008: Serious Saver

Filed under Money

I’ve taken all my money out of my term deposit account, and opened up a new “Serious Saver” account at my banking institution. Before you think that I’m going entirely against everything I said in my earlier post, rest assured that this decision was made after much contemplation, mental arithmetic, and drawing up of spreadsheets to assess the pros and cons. The terms are reasonable:

  1. No account fees
  2. No minimum account balance
  3. Higher interest rate calculated monthly (provided you don’t make any withdrawals in that month, in which case you’ll get zero interest)

It’s the last point that convinced me to switch accounts, but it’s probably also the point that will put most people off (e.g. not being able to withdraw the money). My term deposit was only offering me about 4% annual interest, so an extra 1% per annum will allow me about an extra $200AUD each year.

Not being able to withdraw the money isn’t a problem for me as I never touched the money in my term deposit anyway (there’s a reason they’re called savings, not spendings). In fact, it’s now easier for me to deposit savings into the account (I don’t have to wait for one day every three months like I did with my term deposit), so there was essentially nothing in the terms and conditions that weren’t in my favour, and nothing that could discourage me from saving even more than I currently do.

The point of this entry however, wasn’t to boast about my sudden burst in income, but rather to impart a piece of advice about banking: Don’t stay with your bank simply because you’re too lazy to change. Shop around a bit. Compare rates at other banks, compare their different terms and conditions, and even consider different banking options within the one bank. Don’t fall into the trap of simply thinking “hey, that bank will give me an extra 1% each year!” without researching the T&C – if they charge you an annual account fee that gobbles up that extra 1%, what’s the point?

A bit of research will take you far. Don’t become complacent with your 5% interest when you can get 8% interest somewhere else! Who knows, maybe you’ll find yourself $200AUD richer at the end of the year as well.

9 Responses to “Serious Saver”

  1. You’re too right, I have the same bank account I have since my mum opened one for me when I was 3 years old…Carl keeps telling me to change banks for better interest or lower fees but I just can’t be bothered opening a new one when I have had this one for so long. Shame on me.

    Bobbi-lee on November 23 2008 #

  2. Wow…I haven’t seen a bank account offering 5% interest in years, let alone 8%.

    -_-

    Leila on November 23 2008 #

  3. I like staying with the same bank because I know they are reliable. A few weeks ago people were panicking and withdrawing everything because various banks were shutting down, but luckily I knew my bank was okay!

    marilyn on November 24 2008 #

  4. It’s always good to look around and see if you can get better interests with good ‘rules’ that suit your personal needs :)

    Chans on November 24 2008 #

  5. Sounds look good advice indeedy, and that I’ve been taking- I guess it’s lucky that my bank offers the most competitive rate yet!

    Carmen on November 24 2008 #

  6. I need to change banks. Mine keeps screwing me over.

    Veronica on November 24 2008 #

  7. Meh, I’m lazy and I’ve had the same bank account since I was a kid. I’m not even considering a chance, since all my family members have accounts in the same bank which makes it easier for us to borrow money from each other :P

    Kaisa on November 24 2008 #

  8. [...] for those of us with no debts, and large savings. The below is a screencap of the activity in my serious saver account (the descendant of my term deposit account, not my normal everyday bank account!) for the past [...]

    Jingwen » Blog Archive » Losing My Interest on March 31 2009 #

  9. [...] main reason is the interest rate – their current rate is 5.11% p.a., whereas even my high interest savings account is currently only 3.25% p.a (it used to be 5%+ but that fell with the GFC). I currently have about [...]

    Jingwen » Blog Archive » A New Bank Account (Again!) on September 2 2009 #

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