'Be a rate tart': switch savings accounts to get rates above 3pc

Dear Nicole,
I note that in a recent column you recommended placing spare funds of $60 in a high interest bank account. Could you please advise how one finds such a thing? The best I can find is 2.5 per cent for a fixed deposit. I am living on super and would love to be able to place other savings into an account that offers access to funds and ensures I am not going backwards due to cost of living etc. Your advice would be appreciated.
Lori, Bayside Area

Thanks for the question, Lori. It's not been that long since I answered a similar one but rates are falling virtually faster than I can type! Besides, roughly half the high-interest savings accounts out there are no good to you.

Backing up, the highest interest savings accounts come in two flavours. The first are accounts that guarantee a (usually) paltry base rate but entice with the prospect of a bonus rate if you deposit a proscribed amount of money, and make no withdrawals, in any given month.

These are useless to you. You need to access the money to live.

What you want instead is the second type of account: the introductory or honeymoon rate type.

These honeymoon periods, where higher rates are paid, are usually for a maximum of six months. At this point, you'd need to sign up for the next-best, or a just launched, introductory rate deal.

I'm basically recommending becoming a rate tart Lori, and flitting from one institution to another without a backward glance. In this all-time-low interest rate environment, it's the only way to get a decent return on savings (when you can't meet bonus conditions). Even so, prepare yourself for the fact the top rate is some half a percentage point lower than two years ago.

The best you can do today is RaboDirect with 3.05 per cent for four months, says mozo.com.au. Then you can access 3 per cent for six months from EasyStreet and a further 3 per cent for four months from HSBC. Three per cent is available from St George/Bank of Melbourne/Bank SA for the three months after that.

The hassle of regularly switching accounts could be well worth it: on a $100,000 deposit, you stand to make 55 basis points above the 2.5 per cent you quote, Lori, or nearly $200 over four months (RaboDirect). Then another $250 in the next six months (EasyStreet), and $167 in the following four months (HSBC). Etcetera etcetera to every new and existing deal.

That's your car rego paid for. Or Christmas next year.

Of course, the pay-off is even higher if you have more than $100,000. And you'll get fast at the paperwork???

Nicole Pedersen-McKinnon is a money educator and consumer advocate: themoneymentorway.com. You can write to her for help solving your money problem, or with a consumer question, at nicolehelps@fairfaxmedia.com.au.

This story 'Be a rate tart': switch savings accounts to get rates above 3pc first appeared on The Sydney Morning Herald.