Top five savings account mistakes
Avoid these pitfalls if you want to make the most of your money.
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For many older Australians, a savings account represents both security and financial independence.
Whether it’s holding funds for emergencies, travel, or helping the grandkids, having money tucked away provides peace of mind.
However, even seasoned savers can fall into common traps that erode the value of their hard-earned savings. Here are the top mistakes to watch out for – and how to avoid them.
1. Settling for low interest rates
One of the most common mistakes is sticking with the same bank for decades out of loyalty, even when better rates are available elsewhere. Many older Australians are earning little to no interest on their savings because traditional accounts offer minimal returns. In today’s market, it’s worth comparing rates regularly. Online banks and credit unions can offer more competitive interest rates – and it’s worth asking your own bank if they can match the rate you can get elsewhere
2. Ignoring inflation
Even modest inflation can chip away at the value of your savings over time. For example, if your account earns 1% interest and inflation is running at 3%, your money is effectively losing value. Look for savings products that at least keep pace with inflation. Otherwise, consider diversifying into low-risk investment options that offer better growth potential while still preserving capital.
3. Not taking advantage of bonus interest
Many banks offer bonus interest rates if you meet certain conditions, such as making regular deposits and avoiding withdrawals. These offers can significantly boost your returns, but only if you understand and follow the rules. Missing a monthly deposit or making an unexpected withdrawal can disqualify you from the bonus rate.
4. Keeping too much in savings
While it’s important to have an emergency fund, holding large amounts of cash in a low-yield account may not be the most effective strategy. Once your short-term needs are covered, consider whether part of your savings might work harder elsewhere, such as in a term deposit or conservative managed fund.
5. Overlooking account fees
Some savings accounts come with hidden fees, especially if you don’t meet certain conditions. These might include monthly service charges, excess withdrawal fees, or inactivity penalties. Always read the fine print and choose a fee-free account where possible.
Final thoughts
A savings account should help protect and grow your money, not quietly diminish it. By regularly reviewing your account, comparing offers, and staying informed, you can ensure your savings are working as hard as you did to earn them.
A few simple changes can make a significant difference over time.
National Seniors Australia Ltd ABN 89 050 523 003 arranges deposits as an authorised representative (AR 282736) of Auswide Bank Ltd (Auswide Bank) ABN 40 087 652 060, AFSL and Australian Credit Licence 239686. Auswide Bank is a wholly owned subsidiary of MyState Bank Limited ABN 89 067 729 195, part of MyState Limited ABN 26 133 623 962. We do not provide any advice based on any consideration of your objectives, financial situation or needs. A target market determination can be obtained at auswidebank.com.au/tmd. Before making a decision to invest, please consider the Terms and Conditions. If you make a deposit, we will receive a commission from Auswide Bank. For more information about our relationship with Auswide Bank please read the Financial Service Guide contained in the Terms and Conditions*. This account is protected by the Australian Government deposit guarantee. Up to $250,000 of deposits in ‘protected accounts’ held by an entity with Auswide Bank are covered under the Financial Claims Scheme. Information on the Financial Claims Scheme is available at www.fcs.gov.au
This article and any links provided are for general information only and should not be taken as constituting professional advice. National Seniors is not a financial advisor. You should consider seeking independent legal, financial, taxation or other advice to check how any information provided relates to your unique circumstances.
