Here are some other banks that offer quite a bit more on their savings accounts than the big four banks.

Warning: Product features such as fees and interest rates applicable change without notice. Please confirm all details with the relevant product provider before taking any action which may lead to financial loss.

Despite these “extra costs” they are making record profits. Does this seem fair?

You are paying for the Big 4 Bank Profits.

“ANZ Banking Group Ltd says its third quarter net profit was up 37 per cent”
“THE Commonwealth Bank has delivered a record $5.66 billion profit, fuelling claims of profit-gouging”
“The National Australia Bank has reported a 63-per cent jump in full-year profits to $4.2 billion”
“Westpac profit soars 84% to record $6.4bn”

Here’s what you can do to beat them at their own game.

Get out of your comfort zone!

Most Australian’s bank with the big 4 (ANZ, Commonwealth Bank, NAB and Westpac) and most people have, bank , savings accounts, credit cards, car or personal loans and a mortgage or home loan. If you take a little time to compare what’s available, get out of your comfort zone and actually move your custom to the better alternatives you will save money and force the big banks to compete.

Did you know three of the big 4 actually have smaller subsidiaries.

• Commonwealth Bank owns Bankwest.
• NAB owns UBank.
• Westpac owns St George Bank.

These subsidiaries typically allow the big banks to engage in more competitive practices to combat the lesser known players (in Australia) such as ING Direct, Rabo Australia, Citibank and HSBC. You will typically find that the interest rates offered by these subsidiaries and lesser knowns banks are more competitive than the big 4.

Now note the last banks mentioned. These are not small banks but some of the largest banks in the world whom have an Australian presence. If you are worried about having your money or loans with banks smaller than the big 4 then this is not a reason to discount these banks.

You have to be prepared to widen your view past your childhood school bank account if you want to save.

You don’t have to have all your eggs or bank products in one basket because managing multiple accounts with internet banking is easy.

One bank might have the best home loan rate whilst another might have the best savings account interest rate. Using the net makes it easy to transfer money between banks and you can ask your bank not to send you hard copy statements to cut paperwork.

Kick them where it hurts. Show them what loyalty means. Don’t get mad, get even.

Top 10 Ways to Screw the Big 4 Banks

1. Transfer all surplus cash to a high interest savings account. Compare high interest savings accounts.
2. Transfer your mortgage to a lower interest rate home loan. Use a reputable mortgage broker to save time.
3. Open a no monthly fee transaction account and arrange for your wages to be deposited into it.
4. Pay down or pay out outstanding credit card balances and close the card or transfer to a no annual fee credit card.
5. Balance transfer large credit card debts to a low interest credit card.
6. Don’t get sucked in by credit card rewards programs that you fund with higher fees. Transfer to a low interest or no annual fee credit card.
7. Debt consolidation. Amalgamate high interest loans (personal loans, car loans, credit cards) into your home loan and keep making repayments at the old level.
8. Check out the more competitive subsidiaries – CBA/BankWest, Westpac/St George, NAB/UBank.
9. Play them off. Tell your bank you are going to leave for a lower cost competitor and ask them to match it. Check exit fees payable before taking any action.
10.Get the best banking product wherever you can. With internet banking you don’t need to have all your products with the same provider.

Compare, move and save or they will treat you as they do now.

Warning: The majority of bank loan products (home loans and personal loans) and some other bank products will have exit or early repayment fees that may be applicable. You must find out what these are before taking any action. Any decision to change products must take these factors into account. Please seek advice from an appropriate professional adviser before taking any action.

Having a bank account will help children learn:

• the concept of interest
• understanding fees
• savings goal setting
• reading a bank statement
• interacting with the bank – making deposits and withdrawals via phone, online or in person

This article provides a run down on some of the childrens savings accounts available from the major institutions.

Childrens Bank Account Summary Table

Warning

Before you start you should be aware that children have special tax rates (see ATO website) and if you are considering trying to “save tax” by holding large amounts of money in your child’s name then you would be in danger of attracting undue attention from the ATO. The ATO is well aware of this issue and you would not the first to think of doing it. Banks routinely report all transactions of a large size to the ATO. If you do want to save tax then there may be better options open to you. It all starts with your goal. If you want to starting a savings plan with the intention of funding education costs, a house deposit or even funding their retirement needs then there are specific tax enhanced savings vehicles probably more suited to these needs (eg: Savings Bonds, and Superannuation). If any of these are your intentions it would be wise to see a financial planner.

Tax Issues

Some issues you need to be aware of when it comes to tax on childrens savings accounts are best answered by the ATO including:

Does a child have to quote a tax file number (TFN)?

Who declares interest earned by the child’s savings account?

Does the child need to lodge a tax return?

Childrens Savings Account Details

ANZ Progress Saver

For children under 12 years of age ANZ require the account to be opened in the name of an adult in trust for the child. The Progress Saver account offers bonus interest if you deposit $10 or more and have no withdrawals or debits each month.

The standard interest rate is 0.01% with bonus interest of 4.25%.

Other features include:

• Minimum opening and ongoing balance $10
• No monthly account service fee.
• You can deposit cash directly into your account through branches
• You can track saving progress with a savings graph on each statement.
• Automatic savings plan
• Receive one free ANZ Transaction as defined in the ANZ Personal Banking Account Fees and Charges (PDF 324kB) booklet

Commonwealth Bank Youthsaver Account

The CBA Youthsaver account is suitable for children under 18 years of age. It offers standard interest of 0.01% with bonus interest of 4.00% if you make one deposit and no withdrawals each calendar month.

Other features:

• No monthly account fee
• No withdrawal fees when you use Commonwealth Bank ATMs and branches
• Primary school students can bank at school if their school participates in the Commonwealth Bank School Banking program.

The Commonwealth Bank run the well known Dollarmites Club program with a dedicated website with games, activities, downloads as well as material for parents.

NAB Smart Junior Saver

The NAB Smart Junior Saver is for children under 18 years. It offers a standard interest rate of 1.00% with bonus interest of 3.00% payable when at least one deposit and no withdrawals are made each month.

Other highlights include:

• A free money box
• No minimum or opening balance requirements
• No transaction or account keeping fees while they are under 18 years old
• Quarterly statements with a savings graph to monitor your progress
• Access at any NAB branch, or through NAB Internet Banking or NAB Telephone Banking

Westpac Kids Reward Saver / Westpac Youth Reward Saver

Westpac has two childrens accounts, the Kids Reward Saver for children under 12 and the Youth Reward Saver for those under 21.

They offer a standard interest rate of 0.75% with bonus interest of 3.40% if you make a deposit and no withdrawals each month. They also offer a special incentive of extra interest for new accounts opened between 9 March 2010 and 11 April 2010 of 1.55% for 4 months. Total interest if you meet these requirements is 5.70%.

Both have similar features including:

• No monthly service fee
• Free withdrawals each month (when a withdrawal is made the standard bonus interest rate won’t apply)
• Deposits into the account can be made by visiting a branch or via Online Banking by providing the BSB and account number.
• Monthly statements

Bankwest

Bankwest have two childrens savings accounts one is a transaction account and the other is a high interest savings account. The transaction account is a requirement before you can open the high interest savings account.

Bankwest Children’s Savings Account

This account has a tiered interest schedule:

• balances less than $5,000 the interest is 0.25%
• balances of $5,000 to $10,000 the interest is 1.25%, and
• for balances greater than $10,000 the interest is 2.25%.

Features include:

• Suitable for children under 15
• No monthly fees
• It can be linked to the Bankwest Kids’ Bonus Saver

Bankwest Kids’ Bonus Saver

This account pays a whopping 7% bonus interest when deposits of $25 to $250 are made each month and no withdrawals are made. There are also no account fees and access can be made by the parent or guardian via phone or online.

St George Incentive Saver Account

This account is open to all children of any age. It offers standard interest of 0.01% with tiered bonus interest. For amounts from $1 to $50,000, the bonus interest is 1.50%, while amounts greater than $50,000, attract a bonus rate of 2.50%.

To gain the bonus interest at least one deposit and no withdrawals have to be made each month.

For children under age 13 St George offer membership to their Happy Dragon Club with access to special games, puzzles and other educational material and you can download colouring-in sheets to keep them occupied.

For parents they offer some tips and lessons to help children learn good money habits and these six simple money lessons explaining what money concepts kids can understand at their various developmental stages.

Suncorp Kids Savings Account

The Suncorp Kids Savings Account offers standard interest of 1.25% and bonus interest of 3.75% for every month where a deposit of $20 or more is made with no more than one withdrawal.

The account features include:

• No monthly account keeping fee
• No Suncorp Bank transaction fees
• Monthly statements with a savings graph to track progress

Suncorp also has a childrens website called Suncorp Kids, which provides educational material for for children including goal setting, worksheets and games as well as information for parents.

Alternatives Options for Older Children

ING Direct Savings Maximiser

Whilst not specifically for children the ING Direct Savings Maximiser allows children as young as 13 years to open an account. The Savings Maximiser is a popular online high interest savings account that pays a standard interest of 4.50% with new accounts currently an extra 1.35% for 4 months.

It features:

• No monthly fees
• A high standard interest rate
• Does not require any regular monthly deposits, and
• Has no minimum balance

Disclaimer: Product features including interest rates change without notice. Please check all details with the product provider before taking any action. It is highly recommended that you consult a tax adviser before starting any of these types of accounts as there may be unintended taxation consequences due to the different taxation rules for minors (children under the age of 18).

There are a quite a few variations on the eligibility to qualify for these bonuses so please check the details carefully before making any decision. Common qualifications include:

• minimum monthly deposit amount
• restrictions on making withdrawals (ie if you withdraw funds then you don’t qualify)
• maximum account balance
• transaction account with same bank

Most have a minimum amount you need to deposit each month and may also have restrictions on whether you can actually withdraw funds and still qualify for the bonus interest. Only products that have an incentive for regular monthly deposits have been listed. Many of the banks have other savings accounts that actually have higher interest rates even taking into consideration the bonus rates so if you want to open an account with your favourite bank check their other products first.

There are two products that standout from the rest, Bankwest’s Regular Saver and UBank’s USaver. The Bankwest product has the higher interest rate but has a fair number of requirements in that you need to deposit between $50 and $500 per month, link it to an eligible Bankwest transaction account and and if you make a withdrawal you get nil interest. The maximum opening balance is also just $500. The USaver product on the other hand only requires you to initiate an Automatic Savings Plan for at least $100 per month and has a maximum eligible balance of $150,000. USaver’s bonus rate of 0.10% isn’t huge but when added to the standard rate of 5.85% it is.

Things to Consider

Many of the products considered had an overall interest rate less than other high interest savings accounts with the same bank.

If you are saving for a home deposit and have never purchased a home before then you might be better off considering (FHSA) where the Government contributes 17% of what you contribute each year on the first $5,000.

Whilst most of the accounts require you to be 18 or over some like the Bankwest Regular Saver allows younger account holders. If you are under 18 years of age you need to consider the taxation consequences of your earnings as minors have special tax rates. If you are a parent you might consider the alternative of opening an account in trust for your child if the earnings are going to be significant. Also, if you are married, you might also consider who is paying a lower rate of tax on interest income. Obviously you need to consult your tax adviser or financial planner to get qualified advice in these matters.

All interest rates were correct at time of publication. Please check with product providers to confirm before making any decision.

Disclaimer: Product interest rates and features change without notice. Please check with the product provider before making any decision and consult your financial planner if you require advice.

Citibank Online Saver is continuing to push for attention by keeping their rate just above their competitors – 5.88% up from 5.71%.

ING Direct Savings Maximiser seem to have locked horns with their main opposition UBank USaver as both have increased their rate to 5.85%, up from 5.60% and 5.62% respectively.

RaboPlus passed on the full increase with their Premium Saver account next with a creditable 5.75% up from 5.50%.

Suncorp eOptions have maintained their 12 month eOption sub account flexirate of 6.45% (read term deposit) with the ordinary rate up 0.25% to 4.25%.

The Bad Guys

The Big Four Banks a have all blown us a raspberry with no change as have Bankwest, HSBC and St George.

Click here to compare savings accounts.

Disclaimer: Rates can change daily. Many savings account providers only offer these high rates to new accounts or have other restrictions. Before taking any action please confirm all details including whether you qualify with the savings account provider.

You can contribute up to $5,000 each year into these accounts and the government will kick in an additional 17%. Add on top of that the interest earned and your going to be well on your way to saving for that deposit.

There are rules associated with the accounts, which you can read here [First Home Saver Account Guide], but if you are already putting savings away and don’t have one then you are missing out.

Not all banks offer and the interest rates vary but the current offering from ME Bank has a very high interest rate. Evern higher than most ordinary savings accounts.

ME Bank’s First Home Saver currently has an interest rate of 6.25% pa. There are no monthly fees to worry about either.

Click here to compare .

Disclaimer: Interest rates and features change without notice, please check all details before making any decision and seek advice from a Financial Planner.

The Citibank Online Saver has a standard interest rate of 4.25% with no monthly fees or minimum balance requrirements.

The Bankwest TeleNet Saver now has a promotional 12 month introductory interest rate of 5.62% pa. Currently there are no fees or minimum balance.

Existing new TeleNet Saver customers who are still in the introductory period will also receive the new rate for the remainder of the introductory period.

To compare other savings accounts covered by us click here: Compare Savings Accounts.