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Three ways Aussies can benefit from the banks' war on deposits

Samantha Menzies
Three ways Aussies can benefit from the banks' war on deposits

With the banks scared, and record low interest rates showing no signs of rising, here's how consumers can benefit from the Aussie bank war on deposits.

A recent survey by ME Bank showed 56 per cent of Australians reported that they had cash savings of $10,000 or less and 16 per cent reported that they had cash savings of between $10,000 and $30,000.

But according to Six Park founder Patrick Garrett, there are three tips for how Aussies with money in the bank can make sure they aren't a casualty on the bank's battle for profits. 

“Traditional savers are considered one of the main 'losers' in this low interest rate environment, but there are opportunities for growth if they know where to look," he said.

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Negotiate for a better term deposit

With interest rates continuing to hover at historical lows, keeping your cash in a standard transactional account is almost akin to losing money, Garrett said.

"If you don’t need to access your money within a few months, look for a term deposit at a challenge bank or credit union. According to Canstar, the best rates are currently around 3% and will only have your cash locked in for three months."

Pay down your mortgage

Garrett pointed out that this is a once in a lifetime opportunity for many Aussies to pay down their home loan faster.

"If you can, don't cut your payments when your interest rates drop, add more and cut into the principle of your loan while you can."

"If you don't want to lock away your money in case of an emergency, set up an offset account and put your cash in there to minimise your interest repayments."

Also read: Aussie economy could face another two rate cuts this year

Invest for growth

For those Aussies with a bit more cash and longer term financial goals, investing in shares is a worthwhile consideration that has been proven to grow your wealth over time.

"If you are dipping your toe in the water, there are plenty of new low cost investment management platforms coming into the market known colloquially as "robo-advisers"," he said.

"You'll get the most out of your money by cutting back on the fees and charges that hit you before you even get a chance to benefit from returns. We recommend looking for low cost platforms with an Advisory Board and management team with the experience that you can trust and a strategy that gives you the essential diversification of your assets."