Savers have to make the best of slim pickings
With savings interest rates continuing to sit near the bottom of the scale and inflation averaging 1.6% over the last 12 months, there are not a lot of opportunities for savers to make returns on their investments.
“In the current environment savings accounts should definitely be a short-term option” says Canstar general manager Jose George. “They provide a good holding area for your money if you are looking to make a purchase of say a car or even a home in the near term. The sweetener with savings accounts is that they usually have very reasonable fees and charges, and where you may see a small return, as a long-term investment option, they are not going to get you the best deal.”
What short term savers should do to maximise their returns
For those consumers who don’t want to lock their savings away but still want to see a return there are options out there.
Latest information on canstar.co.nz shows that it is the smaller players who are offering the better rates for the accounts that give instant access to your cash. That said, better rates are being offered for those who are prepared to give notice for withdrawals. The current maximum base interest rate available with an on-call savings account is 2.75% versus 3.25% for a notice savings account.
George goes on to say
“There is no doubt that the savings environment continues to be a difficult one in New Zealand but there are options out there. It pays to shop around and look further afield then your everyday banking provider and, if you have a lump sum to invest, it’s also worth negotiating as better rates can be offered in some circumstances. It always pays to ask.”
Ways to improve your returns
In the current low interest environment, to maximise returns remember a few simple rules:
• No frills can have better interest rates. If you are willing to go for a basic account with very flipside is you may be able to get a better interest rate
• Compare. The saving market is a crowded one and the best deals are not always with the bigger banks. Click here for details
• Will you need instant access to your cash? If the answer is no, you may be able to get a better rate on a notice account.
• Check the small print. Dropping below a minimum balance could void any interest agreement that was on place
• Check your provider’s fees, terms and conditions. Find out how the interest is calculated and paid, interest rate changes and fees charged (if any) for withdrawals or transfers.