How to Make Your Savings Work for You in a Low-Rate Climate

Over the last decade, Australia’s interest-rate environment has been great for borrowers, but increasingly more challenging for savers – particularly those who prefer to hold substantial portions of their savings in low-risk savings options like savings accounts and term deposits.

The last time the Reserve Bank of Australia raised the official cash rate was in November 2010. Since then, the cash rate declined steadily, before hitting a record low of 0.25 per cent in 2020. *

Just because interest rates are low, doesn’t mean you can’t explore your options and make your savings vehicles work harder for you.

Here are six steps you can take to make more of your savings in 2020.

1. Look at your investment timeframe

Decide whether you need easy access to your cash or are happy to tie it up for a while. If you need to be able to withdraw your cash in an emergency, it’s best to opt for a savings account. In some cases, this type of account might offer you a higher interest rate than your everyday transaction account, and you’ll still have access to your money when you need it.

Some savings accounts reward you with bonus interest if you do not make a withdrawal each month.

2. Check your account’s current fees and penalties

Review your savings accounts for account-keeping fees, as they can eat away the return on your savings. It’s also worth negotiating with your bank to see if they can do a better deal for you on fees.

Remember that the interest rate you receive might be reduced if you make withdrawals so it’s worth checking the terms and conditions on your bank’s website in case there are any potential penalties associated with the account you’re using.

3. Be aware that introductory rates will revert to a base rate

Accounts that offer great introductory interest rates may change back to a less competitive base rate after three or six months. Make sure that you’re aware of the base rate and check it’s competitiveness against the open market.

The other consideration with at-call savings accounts is that your return is not guaranteed. This is because the rate on offer can change in line with the Reserve Bank of Australia’s interest rate decisions.

4. Consider term deposits for a guaranteed return

If you want a more secure return, you could consider a term deposit. This option will require you to lock up your money for a fixed term, ranging from one month to five years.

In return, you receive a specific interest rate, depending on how long your cash is locked-up for, and you typically won’t have to pay any setup or monthly fees.

As with any type of bank account, make sure you check what the withdrawal rules are. If you want to access your cash before the term is up, you may have to give notice and pay a penalty, or your rate may be reduced.

Most banks allow you to set up a term deposit online via Internet banking or, if you would prefer, you can still do this at your local branch.

5. Use an independent site to compare savings and deposit accounts

Independent comparison sites can help you to compare the rates, fees and features on savings accounts and term deposits.

6. Speak with your bank about the options that would best suit you

Your bank is well-placed to give you advice on savings options for your specific needs.

Financial advisers can also provide useful guidance about your whole savings and investment portfolio (which may include at-call savings accounts, term deposits, superannuation, pensions, shares, investment bonds and other types of savings vehicles).

Despite the current low interest rate climate, it’s worth reviewing your options, so you can make more of your savings and decide if it best to go towards any existing debt that may have higher interest rates applied or to keep the funds invested for the future.

Don’t hesitate to give us a call should you require further assistance.




The material shown in this article is for general information purposes only. It is not intended to be, nor should it be read as specific personal investment or risk advice.
Before acting on any of the information contained in this article you should obtain special advice from a specialist investment or risk professional, which is appropriate to your specific investment or risk needs, objectives and financial situation.
Whilst all care is taken in the preparation of this material, no warranty is given with respect to the information provided, and accordingly no responsibility for errors or omissions, including responsibility to any person by reason of negligence is accepted by RP Wealth Management.

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Ronald Pratap

Principal Financial Planner at RP Wealth Management | Financial Planning l SMSF I Insurance l Property Advisory. Our purpose is to provide our clients with sound advice and direction to assist with their financial affairs and help them make the best choices in achieving what is important to them.


Level 2, Suite 205
90 Podium Way
Oran Park NSW 2570

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