Life isn't bad for savers…
6.50%p.a. for 9 months, for investments of $10,000 to less than $500,000. Interest paid at maturity. Offer available until 19/11/10. Available to personal customers upon request only.
9 month term deposits 6.50% - CBA
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I'm a little lay when it comes to this, but do you know what the advantage of the netbanksaver is when compared to the high interest account?
If you have a CBA Streamline, they are "linked" to Netbanksaver and any transfer between them is instantaneous. So Netbanksaver is highly liquid funds earning a much higher rate than your basic savings.
For Commsec accounts to Streamline or the cheque/savings accounts of any other bank, there will be the standard 1-2 day wait for the money to be transferred.
Less relevant info: this wait is not necessary at all considering modern banking technology, but the banks do it so they get to keep your money for 1 day longer (it is financially prudent for them and their shareholders to do this).
AFAIK:
netbank saver you have the advantage of withdrawing and depositing money as you like..there is also no minimum.
with the term deposit your money is locked up for 9 months and you cant touch it.
You could open a new NetBankSaver with an introductory rate of 6.25% until 31.01.11.. Best of both worlds imo, almost good rate as 6.5 and the benefit of anytime access and no lock-in period.
I purposely omitted this to keep things short and simple.
If you have a bunch of money burning your pockets/accounts and would like some serious interest earned on it, getting NetBankSaver could be a very good way to earn a very competitive ~0.53% (yes half a percent) interest per month til January. This is not to be sneezed at, as technically that is very close to what locking away your money for 9 months with the term deposit would get you.
Please note:
You are paid twice (on 1 Dec and 1 Jan) till it drops to the base rate.You need a Streamline to get a NetBankSaver, and that has monthly fees. You should be maxing out that account. Irrelevant for students as they don't pay fees for any basic bank account anywhere, including Streamline.
The Commsec one has no fees(needs a no-fees Commsec cash management account IIRC).
I don't think that this is a bargain at all. See these for comparison:
At call accounts
- Virgin money 6.75% (for 4 months)
- Ubank 6.51% (no time limit)
- CitiBank 6.45% (for 6 months)
- RaboDirect 6.40% (until the end of 2010)
Of course, some conditions apply for these account.But look, this TD has their own min/max condition too. It is just the way thing works.
Alternatively, you can compare it with one-year TD
- ING Direct 6.60%Nine-month TD is not a popular one and it may look very good on CBA. However, when you take at call account and other TD into consideration, this is not a bargain. It is just a relatively good rate when compare to their past pricing. The big four never gives it this much before.
BTW,do you think that CBA can afford this by raising borrowing rate by .45?
Why are we comparing TD rate with at-call account rate?
Because the at call account is clearly better?.
And a lower at call rate gets you more money than this 6.5% TD rate
It depends on why you want the TD.
If you want it to lock in the rate, well, no, the savings accounts won't do that.
But if you are comparing rates, then definitely the savings accounts should be considered, especially if you believe the interest rates on accounts won't be falling any time soon and that the banks are safe enough.
Doing so is like comparing variable and fixed mortgage rates. They are two different products, one allows you to lock in the rate and another lets you surf the wave of rate changes.
Meh. Ubank is 6.51% at call, and should be even better soon.
ubank is 6.01% at at call, it is 6.51% at call with strings attached.
The "strings" are very easy to get around with a couple of mouse clicks.
?
muzzamo - Couple of mouse clicks to transfer $200 from your ubank account to your nominated account a day before the ASP, and it qualifies you for the extra 0.5%. Yes you miss out on interest on the 200 as it's in transit (2/3 of FA) but clearly it's worth it for the extra half percent.
The bonus 0.5% is conditional on having "a total USaver account balance of less than $200,000 per customer".
soakwashrinsespin - I love how you are telling us how much you have in the bank. I don't particularly care… But that said, if you were the financially prudent being that you seem to be you would know that you can call up such financial institutions such as UBank and do a deal with them. Especially because you have over $200,000 in savings.
And if they say no call up another bank which will match or beat that interest rate.Sorry JDogman, I wasn't revealing what I have in the bank, but merely agreeing with muzzamo that the 0.5% bonus does have strings attached. A balance limit of $200,000 does constitute "strings" to my eyes. (I've edited my comment to prevent any further confusion.)
You give good advice about negotiating a rate if you have any significant savings, though.
soakwashrinsespin - its cool! I think I took your post the wrong way around! But I see your point!!! :D
JD
Fair point but I'd consider having a fixed rate for nine months (when rates are going up), a minimum deposit of $10,000 and money not at call bigger strings then an optional deposit each month (which can be reversed)
.
Good i guess if you surplus cash and no debt.
If you still have debt or a mortgage, then any surplus cash is better off in the mortgage "earning the 7.5% mortgage rate" by reducing the balance, without tax implications.
6.5% after tax may be as little as 3.12% nett, if you are on a high tax rate like 48 cents in the dollar.
Completely off-topic from the original bargain, but if you have the option to set up a mortgage offset account, you're effectively reducing the balance of your mortgage (reducing your interest payments) but keep your liquidity. If you pay the money into your loan, you need to formally redraw it and there may be a minimum amount (eg: $20K) and/or a fee to do so.
This gentleman knows his financial management.
Interest paid at maturity.
So you do not get interest on your interest like you do with a regular savings account
Then the government taxes any interest that you earn from these savings.
If the banks and the government are really serious about getting people to save, then the savings rate should be at least the same as the borrowing rate or better, and no taxes!
wow, what a stupid comment
Would you open a store, buy things and sell them for less than what it cost you to buy them?
That is what you are suggesting.
The Government want people to buy properties, sell properties and buy properties again.
They make a load of money with the fees. That's why the tax interests and capital gain.
But then … land tax, capital gain tax on property …
It really doesn't matter where you put your money, you get taxed.
And if you indulge with your money, you get taxed once more (alcohol tax, tabacco tax)
The only way to get away from taxes is to ….. be poor !!I would much rather be wealthy and pay tax than be poor and pay no tax. Think about it.
hmmmm……
1.if everyone one deals in cash, can the tax man find you?
2.if you are unemployed and lives on the dole but you found a big nugget of gold. You then sell it and get $20,000 for it. Would the goverment Tax you then?
3. and if you own nothing (no offical asset) but control lots of assets, would the goverment witchunt you?the smart arse answer to you superkieu…
If I lived on the doll and found a nugget of gold and sold it for $20K it would get taxed as you would make more than the minimum tax-free threshold. Including Low Income Tax Offset, the tax free threshold is $16,000 so you would be taxed on the $4000 Capital Gains (Gold is considered as an investment and if you argue it isnt the tax office will just say its a collectible valued over $500 so they can tax you.. bastards!)
Anyway you have your $4000 + you will be taxed on the New Start Allowance you are given. Governemnt allowances are taxable (Newstart, Youth), pensions are not (Disability, Old ppl)
And overall yes the government will witch hunt you in a bid to get every cent out of you!
But on a sidenote thank you to that lady who beat the Taxman and hello to claiming my educational expenses!!
Edit: What if you hold your gold for a year before selling?? :P 50% Capital Gains!
It's very difficult to deal only in cash. Sending money would be difficult without engaging the banking system, for example.
The $20k gold nugget would be taxable as it's income. Selling that much gold will require you to leave ID at a gold dealer.
If you have enough control over assets to exert control over the buying/selling of them, then yes, you should be taxed. No witch hunt required.
Obeelemon for Treasurer!
I hope you realise that the banks get taxed too. Not to mention that they are incredibly vital to the strength of our economy - a strength that you as a resident receive benefits from.
no one suggest that Banks do not pay tax. They do.
when the goverment demands tax from them, it's called a "Tax incident".
however, Banks want to pay minimum tax.
they naturally would shift some of these "duties" onto the consumers.
and so as the consumers unwittingly share the tax load for the banks, they are taking on the "tax burden".Tax incident does not equal tax burden.
I agree banks are important but that doesnot give them the right to increase excessively. It's just not fair. If we do nothing when they're upping the rate now to almost 8%, what will stop them when they raise it to 16%?
I am questioning the benefits the banks are giving me vs the burdens I have to take on for them.
I do not disagree with the points you make.
My reply was to Obeelemon, whose rant reads like a typical Letter to the Editor in MX written by Mr Whingeateverything from Nobodygivesatossville.
The banks are not increasing excessively. Their funding costs have gone up, mainly because funding from overseas markets have gone up. If you look at any of their annual reports (remember there are serious consequences for misleading the market and breaching the Corporations Act), you can see their funding costs have increased and their profit from retail lending has actually gone down. They are actually absorbing some of the costs. The higher funding costs are just a reality in a world struggling to recover.
And if you look at their profits for last financial year, they are actually inflated profits - during the financial hiccup, the banks wrote off a lot of bad debt in a conservative approach to the uncertainties of the times. Now as economies start to recover and things were not as bad as first thought, these provisions for bad debts are now being added back on to the books, which is adding straight into the bottom line, and in a very big way too. It's not really profit per se, but more moving money around from one financial year to another, albeit for a very legitimate reason.
The other thing to note is that the total bank's profits are not reflective of how much they are "ripping you off". Retail banking is only a part of what they do and retail anking usually accounts for less than $1 billion of total profits (this is from memory from a couple of years ago). Banks make a lot of sweet money from other areas of business - think corporates, advisory and transaction services.
And finally, there are mechanisms to stop banks lifting their rates rdiculously (like to 16%) - explicit stuff like competition (both within the big 4 and with smaller lenders who will pop up if the interest margin is so high that they think they can undercut the big 4 and still make some moolah) and implicit stuff like keeping the government onside.
qazwsx - Well commented there. I wouldn't call it inflated profits, it's just how the concept of accrual accounting works. In the banking industry, analysts look at cash profits rather than accrual profits as a measure of performance.
It's true that funding costs have gone up but hey, these 4 banks combined earn over $20 bil each year. As customers, should we be concerned of the increased costs? It's part of doing business in a competitive environment and the big 4 banks should strive for further efficiencies and utilise the synergies and operational size advantage to streamline processes and drive down costs further. Bluescope Steel today announced that they may report a net loss for the first half of the year due to higher material cost and surging Aussie dollar. Why don't they simply pass on the increased production cost to customers, like the banks do? Because BSL operates in a very competitive business environment, unlike the banking industry.
If often hear people say you get taxed on interest earned, therefore saving money in high interest accounts is pointless.
The simple answer is: would you prefer to earn $500 in interest and pay tax on that, or earn $0 in interest and pay no tax?
And obeelemon, expecting banks to pay higher interest than they take in is like expecting a business to buy widgets for $10 and sell them for $9. A winning business case, isn't it?
I think the argument here is that SAVING is actually a very bad way to get wealthy!
After tax, the interest from your savings barely outstrips inflation.
Compare this to the property market — if your house does not increase in value at the same rate as the bank's lending interest rate then you have lost money. Has anyone lost money in property?except much of the population of the united states, whose bubble, coincidentally, reached about half of the size of ours at it's peak.
"Has anyone lost money in property?"
Citizens of Japan, USA, England, Ireland, Iceland, Spain, Estonia, Portugal, etc would have a very different answer to the average Australian. Currently China, Hong Kong, Australia and Canada are bucking the trend. Read up some articles from 2005 in Ireland and the USA about their supreme confidence that they found a way for smart real estate investors to become wealthy. It was stupid not to buy and leverage up. Property always goes up!
It's a given the average person won't become wealthy just by saving (unless they have a very healthy primary income), but not saving is a very easy way to become poor.
Has anyone lost money in property?
The property spruikers certainly havent? LOL
Ditto for cluster's comments - and try Australia in 1988-1994
Savings have their purposes - it just depends on the risk vs return profile ou are trying to establish.
If you are looking at taking on risk for a more variable return (ie chance of a higher return), then interest on savings isn't what you are after.
If you are looking at minimising risk and are happy to take the corresponding lower returns, then interest from savings and term deposits is a relatively cheap, easy and uncomplicated way to achieve that as opposed to getting into the bond markets, etc (of course, your risk assessment will be done on the bank, it's ability to pay you and it's ability to keep paying you that rate).What was the suburb in Werribee where it was later declared a risk to living because fumes from the local land fill were getting to levels the government considered unsafe?
If your suburb becomes less attractive or your property is in the way of a new free way expansion, or perhaps they build a new land fill near you … or a freeway passes your property … etc
I went to CBA Perth CBD today for the deal.
The officer said that the interest has to be paid into an account OTHER than the TD. Can be any account, even outside of CBA.
Anyone else experienced this?
What would be the rationale behind this?
Tax treatment does not change I'm assured.
You probably need to share more details of your TD structure. For a straight TD, you get interest on maturity. For a long dated TD, you may opt for regular payment of interests but these are usually not compounded (ie. principal stays intact throughout the period).
You only need $5000 to get this deal from Netbank
I agree with other people's comments about setting up a uBank saver instead and getting 6.51%. People saying there are strings attached is quite ridiculous. Set up an automatic savings plan to transfer $200 a month and your done - set and forget.
You have access to the money for the 9 months unlike a term deposit, and you get interest paid monthly so you earn interest on your interest as you go. Unless you have more than $200,000 to deposit then you can't beat that.
If you had more than $200,000 then surely you'd be looking into property or other investments. Even so you could open a uBank saver with the $200,000 and put the rest into this term deposit…
Ubank etc.
Transfer 50$ a week, if its such a hassle for you, transfer that back to your bank. Easy
I logged on to netbank today and see this:
6.50% p.a. 9 month Term Deposit
Hurry, offer only available until 19 November 2010
Invest from $5,000 to less than $500,000 when you open in NetBank
Available to renewing customers upon request only
Interest paid at maturity
Start saving. Meet Mr. Cricket. Howzat?
Sign up or renew an existing Term Deposit before 31 December 2010 and you could be in the running for a once in a lifetime cricket experience
Five prize-winners get a trip to Brisbane, a one-hour cricket clinic with Mike Hussey and tickets to the Commonwealth Bank One Day International Match between England and Australia
For more information and terms and conditions, click here
Current Term Deposit rates
When you open a Term Deposit, rates and terms most customers choose are displayed. Term Deposit headline rates currently available are below.Term Interest rate Interest paid
60 months 6.40% p.a. Annually
36-47 months 6.20% p.a. Annually
12 months 6.00% p.a. At the end of the term
9 months 6.50% p.a. At the end of the term*
7 months 6.00% p.a. At the end of the term
3 months 5.40% p.a. At the end of the termLess than $5,000 to invest? Consider NetBank Saver, a flexible high interest online savings account. Open now
Important information: Term Deposit interest rates current as at 12/11/2010 but subject to change. Term Deposits have no set up or establishment fee. If your Term Deposit funds are accessed prior to maturity, you may incur an interest adjustment and administration fee. The Bank reserves the right to terminate this offer at any time. Fees and charges may apply. This advice has been prepared without considering your objectives, financial situation or needs, you should consider its appropriateness to your circumstances. General Information and Terms and Conditions for Term Deposit, Transaction and Savings Accounts are available here. Please view our Financial Services Guide. 'Savings Cricket' competition authorised under NSW Permit No. LTPS-10-09461, ACT Permit No. TP 10/04440.1, SA Permit No. T10/2394 and Vic Permit No. 10/3663.
*Available to renewing customers upon request only.Just FYI, for those who want detail.
cf. :-
- CBA's NetBankSaver base rate is 4.75% p.a. No minimum deposit, interest paid monthly. http://www.commbank.com.au/personal/accounts/netbanksaver/
- Commsec's High Interest Account gives 5.50% p.a. No minimum deposit, interest paid monthly. http://www.comsec.com.au/public/Products/investmentaccount.a…
- Ubank gives 6.41% for 9 months, according to http://www.infochoice.com.au (sorry can't find a permalink)
I guess this is a good deal.