There is no doubt that the recent rise in interest rates is good news for the economy as a whole. And while Reserve Bank governor Glenn Stevens insist that the central bank will be “prudent” when it comes to further rate increases, it is looking like the only way rates are going to go is up. So what can savers do to prepare for further interest rate rises?

If you are opening a savings account or are coming to the end of a fixed term on a high interest savings account, a variable savings account is probably the way to go. This means that any further rate increases by the Reserve Bank will be passed on to you. If you are locked into a fixed rate account or term deposit account, you could consider opening a new variable savings account to reap the benefits of any increases in the near future.

When considering how you will manage your savings in the improving economic climate it is a good idea to monitor the market. Banks are inevitably quicker to pass on rate rises to borrowers than savers, but try to get an idea of the banks that are quickest to increase rates on their savings and investment products.

Many Australian banks offer savings accounts with variable interest rates. Take for example ING savings products. ING’s Savings Accelerator account offers a competitive variable rate, with increased rates on balances over $50,000. Other ING savings products include ING Savings Maximiser and DIY Super, which offer varying levels of protection against interest rate fluctuations. This is just an example of the savings accounts one bank has to offer, so be sure to shop around.

While choosing the savings account that delivers the best return is important, it is of little use if you are leaking money on debts. Rising interest rates mean that the interest rate on you credit card, and possibly other loans and your mortgage, will also increase. If you have expensive forms of credit try to get them paid off before rates go up again. Alternatively, consolidate your debts into a fixed rate loan before credit gets more expensive. Also, if you have a variable rate mortgage it may be worth considering a fixed rate.

Nobody can tell exactly when interest rates will rise or by how much, but all the evidence suggests that more increases are on the way. This is always a concern for consumers, but with a little financial planning you can make these increases work for you.

How to make the most of interest rate hikes is a post from: High Interest Savings Accounts

The current financial crisis hitting the world money markets is leading to a record volume of savings account deposits being made.

As share holders see the values of the portfolios plummet there are many that are looking to move their investments into something much safer and a high interest savings account seems to be the answer.

Cash is taking it’s place as king once again!

high interest savings account products are always a popular option during times of financial instability and they generally offer a known rate of return and are considered very safe as the odds of you losing your investment are very unlikely.

The interest rates on offer have also been very competitive for savers recently as most banks are seeking to boost their own deposits and reduce their dependence on needing to borrow from other banks to fund their lending. A result of the increased cost of borrowing that banks are facing is that the banks may find it cheap to raise money by paying interest on deposits rather than through wholesale borrowing.

Generally the online savings account banks offer the best rates but some of the traditional banks with branch networks have been offering interest rates that are higher than they would normally offer as a result of the credit crunch.

Savings Rush is a post from: High Interest Savings Accounts

The days to secure the best savings rates seen in over a decade are numbered in Australia as banks start to lower their rates in anticipation of an expected cut by the Federal Reserve bank next month.

In the past couple of weeks the 12 month term deposit rate for the BankWest tddirect account has been cut by a total of 0.65% – far more than the expected 0.25% fall in rates from the RBA. The td direct product did have a rate of 8.75% for 12 months, this then fell to 8.50% and this week has gone down again to 8.10%. Despite these falls this Bankwest savings product remains one of the more competitive offers on the market.

Raboplus savings accounts rates for their online savings account product have this month fallen from 8.0% down to 7.3%.

There are still some great offers available with the BankWest Telenet Saver offering a rate of 8.50% until Jan 09 and St.George offering a rate of up to 8.10%.  Judging by what has happened so far though it is likely that banks will be quick to reduce rates in line with any fall so now is a good time to secure one of the savings account offers still offering a top rate.

Last chance to secure best interest rates is a post from: High Interest Savings Accounts

Term deposits, sometimes called certificates of deposit, differ from regular savings or checking accounts in that you agree to leave your money on deposit for a specified time, or term.  In return, the bank pays you a higher than average interest rate.  In many cases these accounts also require a higher opening deposit amount than a standard account.

The best savings rates are often found in term deposits, and the longer you agree to keep your funds on deposit, the higher the rate—though the rate advantage tends to narrow when the term extends past about 12 months.  Remember, you’re exposing yourself to a higher interest rate risk the longer you keep your funds tied up, and you’ll want the bank to reward you for that.

Once you make the deposit into a term account, there are early withdrawal penalties to contend with if you need to withdraw your money before the end of the term.  The information you receive before investing should outline these potential costs; if you don’t understand anything or it doesn’t seem clear, be sure to ask a customer service representative at the bank.  Early withdrawal penalties can be large enough to negate the extra interest you’re earning, so be sure you won’t need the money until the end of the term.

A few accounts will allow exceptions to the early withdrawal penalties for certain circumstances, like the death of one of the account holders.  Exceptions like these will be in the account agreement, which you should read before depositing money.

Think carefully about the term of the account before you open it.  The best deposit rates will be offered on the longest terms, but in exchange you’ll be exposing yourself to interest rate risk.  For instance, let’s say rates on an average savings account with no minimum balance are 2%.  You’ve found a 24-month account paying 4%–double the average.  That’s a great deal, until 12 months later, when rates have risen to 5% on regular savings accounts, and your money is stuck in the now low-interest account.  That is interest rate risk.

If you withdraw the money, you’ll pay a penalty, making the effective interest rate on your term account even lower than the advertised 4% rate.  If you leave the money in you’ll avoid the early withdrawal penalty, but you’ll be stuck in a rate that’s currently 1% lower than market rates, and could become even lower than market if other rates continue to rise.

And even though you won’t be moving money in and out of this account, access is important.  You may have a planned use for the funds once the deposit term is up, and electronic funds transfer will keep you from losing money while the funds are being mailed from the bank to you.

So, when it comes to term deposit accounts, the term is important, but so are the other account requirements.  The bank’s best deposit rates will usually be available in this type of account, which also requires minimum deposit amounts.  Think about your comfort level with different terms, and read all the material associated with this account type before you invest.

Term Deposits Explained is a post from: High Interest Savings Accounts