High Interest Rate accounts- strategy advice please

[Deactivated] on 21/12/2010 - 09:33
Last edited 27/12/2010 - 08:07

With all the hoo har over the banks increasing mortgage rates "because of higher borrowing costs" our over committed journos have not looked past their own hip pockets at the other major lie in the banks positions, that rates on savings have quietly dropped.

Rabo bank for instance have now dropped their teaser rate from 6.4% to 6% non teaser. Now getting rid of teaser rates is good, but the sting in the tail is that funds over $200K drop to 5%

Likewise any other bank offering rates including than teaser rates have not been increased when the reserve bank raised the cash rates. So much for cost of funds increasing for the banks.

Anyone have any ideas strategies to help get the best return - in this case its for a SMSF (self managed super fund)

Find Me A Bargain

Comments

  • inherentchoice on 22/12/2010 - 07:28

    Interesting news. I was used to the rates going up in sync with RBA increases. Is Rabo bank still the best at the moment? What about for term deposits?

    I'm pretty sure that if you have more than $50K you can usually negotiate a better rate for fixed terms, just by walking into a bank and asking them to beat their competitor.

    Anyone have any other tips on how to get a good rate for your cash?

  • dr_ rusko on 22/12/2010 - 09:52
    +3

    ubank 6.51 % with a $200/month savings plan
    - plus you dont have to keep reapplying for interest bonus (unlike the c-bank/NAD who dont give you the new deal unless you ask)

    • v1c on 26/12/2010 - 19:59

      Agree, ubank has consistently good rates.

      • [Deactivated] on 27/12/2010 - 08:06

        Ubank dont offer this to SMSF. and their term deposit rates are only available to SMSF with 2 members vs 4 members. Something I raised years ago with them.

        Also their rates drop after $200K as well. But thanks for the thoughts

        • slowmo on 02/01/2011 - 03:28

          can't you split the eggs in the basket?

        • [Deactivated] on 03/01/2011 - 06:39

          Yep, but that means extra annual fees like $4-5K for accounting etc

  • captiancasper on 27/12/2010 - 08:41

    Your right on the the 2 directors but if you don't make any withdrawals Ubank r offering an ongoing 6.41% for SMSF upto $2M

  • krum on 02/01/2011 - 12:03

    Might not be what you're asking or cup of tea but buying USD, could be very lucrative and is another viable/ stable option. It is at an all time high atm (~1.022). With the RBA most likely to increase interest rates on tuesday it would mean a draw back on our dollar. Might be a good quick sharp investment for yourself, Also it is quite stable (or in share terms, a blue chip option). The US economy with over 200 million people has the ability to self-sustain itself and will more or less return back to its old price (when tv's were expensive).

    • dr_ rusko on 02/01/2011 - 12:09

      its been a while but..
      increased interest rates = more people want to move their money to australia to enjoy such rates = increased demand for AUS = increased AUS????

      • Trance N Dance on 02/01/2011 - 12:30

        Yes that is correct. The Japs have been doing it for years.

    • Trance N Dance on 02/01/2011 - 12:29

      Uh the next RBA meeting isn't until February (the 1st to be exact), they skip January for a (holiday) break.

      • krum on 03/01/2011 - 13:33

        Sorry for the very un-detailed explanation. Let me explain what I was trying to convey. While increased I.R (interest rates) theoretically are assumed to increase demand for AUD, realistically I believe that this will not increase the demand for AUD. I believe this because there are economies out there with higher I.R's, if people were to place funds here they would not be achieving the results they could be with another economy such as Brazil where the I.R is double ours. Simple knowledge of this may not in turn cause a spark in the amount of people investing in Australia.

        Another very very simple way to look at this is.
        Y = C+I+G+(X-M), "By No means am I saying that this is exactly how it will occur"

        If I.R was to go upwards then there would be a reduction in Consumption and Investment, as mentioned below repayments on loans etc go upwards while our savings remain the same. Our AUD is on a strong run and this would mean our exports would be more expensive to purchase and with the floodings our crops, land etc. would cause our exports to also drop. Our dollar as mentioned before is doing very well and this means we are importing more and more as the prices of tv's, blu-ray movies etc become cheaper and cheaper.

        Our Australian fiscal balance atm is in a stable position, but with the recent floodings of QLD and the introduction of the NBN, I do not see how it would be possible for our economy to stay out debt.

        In terms of the US economy while it has been spinning out of control due to certain circumstances, the monetary policy put into place would suggest that in a year and half or a year there would be a reduction in the amount of deficit. The only concern atm that I personally have is the housing market, which I still haven't got an understanding of.

        Btw Trance didn't know that.

        Anyway this was way off topic just a suggestion, ozpete have you spoken to any of the banks in person as they usually do increase the rates that they charge. With a bit of negotiation you could increase the rate that Rabo is giving you by going to a competitor and stating that you are receiving such and such deal.

        • [Deactivated] on 03/01/2011 - 20:34

          I havent spoken with any competitor yet, I guess I have to know what is being offered before I can ask. I will be doing that soon with AMP where some TD's are coming due. If they cant match then its off to Rabo or somewhere else. Thanks for the reminder to try this

  • [Deactivated] on 03/01/2011 - 06:59

    Thanks for all the help with ideas etc

    Actually it seems like Rabo will be the one. Here's how it works

    We use the 6% account for regular savings - or funds we think we might need during the month.

    Then we use the premium saver account which offers 6.1% if we grow this account by $200 each month (interest growth doesnt count) Catch is that if we need to access the funds we do that at the beginning of the month, take all the funds out (otherwise we get only 4.5%) and move it somewhere where we get more than 4.5% and then move it back the next month.

    While it appears a Hassle the only real need we forsee with withdrawing the funds would be if there was better interest rates on offer. TD's at present are too close to the 6.1% to risk putting the funds there especialy with the RBA threats to increase rates.

    Although we may all be screwed again as the banks may increase rates on loans but not on deposits. Funny where are the media jocks on this, they all focus on the loan rate rises, but ignore the greater gouge that the banks have made on savers, where rates didn't move at all.

    Thanks for all the thoughts, if you have more please share them.

    As for the USD account concept, thanks thats something to consider one day, but as for the Aussie dropping, that may be true, but not for the reasons you gave. The ones you gave to me would mean it would actually appreciate. The US Debt is increasing as it can't sustain itself. War and US social security debt are draining funds big time. Manufacturing is like here is still moving to China.

    But with double dip world economic issues still looming, and the Euro issues, world fuel prices dampening any recovery, the Aussie might get hit as funds maybe needed there, and if world demand shows signs of dropping for our resources the RBA may have to adjust rates downwards, then holding USD maybe a good bet. Pity I am not such a gambler… at least right now

  • mick01 on 05/01/2011 - 10:19

    Citibank Online Saver has a 6 month intro rate of 6.45% at the moment which, while not quite as high as Ubank, is still a pretty good rate.

    http://www.citibank.com.au/AUGCB/APPS/portal/loadPage.do?pat…

    mick

    • Ndiddy on 05/01/2011 - 11:01

      Goes back to std variable rate of 5.25% (currently) after 6 months. I'm currently with Citibank on this offer but only because I am also going to be given 10,000 skyward miles for opening the account. Once that's credited I'll be moving to Ubank.

      It'd be worth doing your sums to see which option gives you the most money at whatever your predetermined end date is.

      • mick01 on 05/01/2011 - 16:59

        Yep, Ubank definitely a better rate, unless you have more than $200K to invest (which I inferred OP does). The Citibank rate is good for up to $2M.

        mick

        • Ndiddy on 05/01/2011 - 17:06

          If the amount is great than 200K doesn't it just drop to the standard 6.01 (so less the ASP)? This is what I was told over the phone by Ubank when I was researching High interest accounts.

          I guess the OP could always invest with Citibank for the promo period and then transfer out so that he can get better than the std citibank rate.

  • bemybubble on 05/01/2011 - 15:25

    ozpete,

    Im an accountant and just opened a UBANK account for my SMSF. Initially they only did it for term deposits but now they do have a usaver account for SMSF.

    • [Deactivated] on 05/01/2011 - 18:34

      Thanks but we have 4 in our SMSF and by law all have to be directors and Ubank will only accept accounts with 2 directors

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