Australians are missing out on more than $4 billion in unpaid interest each year by keeping their money in low-interest bearing accounts.
According to RaboDirect research, this amount could even be somewhat conservative: the actual figure as high as $6 billion.
The issue is clear – too many people are using the wrong accounts to house the bulk of their money, either could be due to being unaware of the market or simple inertia.
Thankfully the solution to the problem is just as simple – consumers need to take action.
Rather than leaving money lying idle in a low-interest everyday transaction account, switching surplus savings to a high interest savings account could essentially result in ‘free money’ in the form of interest.
Several transaction accounts pay zero or low interest and are dressed up and sold as ‘savings’ accounts to the detriment of the consumer.
Data shows that Australians are doing the right thing by saving more – but by not using the right account they are doing themselves a disservice.
At present a genuine savings account should be offering around 6% interest, and if it isn’t you should be asking why.
Another sign of a genuine savings account is that you won’t in most cases be able to access your money via an ATM; however, they can be linked to an everyday transaction account that allows you to easily transfer money between accounts when you want to access it.
Consider having your salary paid directly into your high interest savings account, where it will earn more interest, and then transfer the amount you need to cover your everyday transactions and bills into your linked account so you can get your hands on it quickly if need be.
It’s that simple!