On call savings accounts (high interest)

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Forums › Finance and wealth management › On call savings accounts (high interest)

dunnersdude

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#237780 18-Jun-2018 08:51

These seem to be dead. Almost 0 interest so what's the point?

Rabo has one that requires putting $50 in each month (then you lose interest for the months you drop the balance which is a big hit on the remaining funds).

Heartland has 2.75% - are they the only true high interest on call account left? Any experiences with them and how rapidly do they transfer to other banks? Can it be ready in another bank within a few hours on business days?

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#2039472 18-Jun-2018 10:23

ANZ and prob others have a 2.20% Serious Saver. But yeah accounting for inflation you get close to 0. How I see it - even 2% it's not much really. You're better doing more Kiwisaver contribution, put towards a share market index etc or a bond but those are not so short term. BNZ is also 2.20% with their Rapid Save account, the BNZ you only need to deposit $1 a month, ANZ is $20.

dunnersdude

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#2039513 18-Jun-2018 10:58

KiwiSaver doesn't allow instant access to funds. Any account that reduces interest means you lose. For example if you had $100,000 in the account and withdrew $100 then you lose an entire month's interest on the remaining $99,900.

Ge0rge

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#2039515 18-Jun-2018 11:02

Kiwibank will give you .54% on the total balance if you make a withdrawl that month, 1.61% if you dont.

nutbugs

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#2039518 18-Jun-2018 11:07

This is the flip side of having cheap mortgage/borrowing rates. Your options really are term deposits (which are often not much better) or something like peer to peer lending or a shares index. That is the reality of todays economic climate. Great if you are up to your eyeballs in debt - not so much if you have lots of savings.

dunnersdude

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#2039521 18-Jun-2018 11:08

Heartland 2.75% entirely on call no minimum balances and earn on every dollar in the account seems ok?

BBB stable SnP is reasonable for this type of institution I guess?

rayonline

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#2039522 18-Jun-2018 11:10

dunnersdude: For example if you had $100,000 in the account and withdrew $100 then you lose an entire month's interest on the remaining $99,900.

Have multiple savings accounts so you don't lose all in one hit. Do a automatic monthly deposit of that $20 or $1 as needed to get the bonus interest.

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dunnersdude

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#2039523 18-Jun-2018 11:12

rayonline:
dunnersdude: For example if you had $100,000 in the account and withdrew $100 then you lose an entire month's interest on the remaining $99,900.

Have multiple savings accounts so you don't lose all in one hit. Do a automatic monthly deposit of that $20 or $1 as needed to get the bonus interest.

You always lose on the account that you need to withdraw from though.

rayonline

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#2039527 18-Jun-2018 11:15

dunnersdude:
rayonline:

dunnersdude: For example if you had $100,000 in the account and withdrew $100 then you lose an entire month's interest on the remaining $99,900.

Have multiple savings accounts so you don't lose all in one hit. Do a automatic monthly deposit of that $20 or $1 as needed to get the bonus interest.

You always lose on the account that you need to withdraw from though.

At least it's not all of it. But term deposit or savings account bugger all really. Better off setting funds to the side longer term and put in a share index or something.

dunnersdude

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#2039528 18-Jun-2018 11:16

The point is if the funds are required on call, is there a better option than Heartland's option, or is Heartland not recommended for some other reason.

rayonline

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#2039533 18-Jun-2018 11:22

dunnersdude: The point is if the funds are required on call, is there a better option than Heartland's option, or is Heartland not recommended for some other reason.

Even if it is Heartland. 0.55% higher. Assuming you are on a 33% tax rate. This 2.55% is gross (before tax).

2.20%. $100k = $2200 minus tax $726 = $1474.

2.55%. $100k = $2,550 minus tax $841.50 = $1,708.50

wellygary

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#2039539 18-Jun-2018 11:26

https://www.interest.co.nz/saving/e-saver-online

Its pretty dire out there, but hey its not often that the Fed Funds rate is higher than the OCR...

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dunnersdude

162 posts

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#2039556 18-Jun-2018 11:41

rayonline:
dunnersdude: The point is if the funds are required on call, is there a better option than Heartland's option, or is Heartland not recommended for some other reason.

Even if it is Heartland. 0.55% higher. Assuming you are on a 33% tax rate. This 2.55% is gross (before tax).

2.20%. $100k = $2200 minus tax $726 = $1474.

2.55%. $100k = $2,550 minus tax $841.50 = $1,708.50

You lose 1/12 so more like $1351 in example 1 though, assuming that the month's interest plummets to effectively zero if a single withdrawal is required.

$122 per month where you need a withdrawal is harsh.

Reduces effective rate by 0.2% per month a withdrawal is required.

By the way Heartland is currently offering 2.75% (subject to fluctuation) not 2.55%

But that's assuming one actually has $100k.....

Oblivian

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#2039557 18-Jun-2018 11:41

I bought this up a few years ago when they plummeted.

I had a descent stash (still do) of coin saved and for years was living on the interest alone. Paid the CC each month with a bit of change to spare. Now I'm lucky to get $6 on $70K a month 'Onlinesaver' format acct!

Unless you can 100% guarantee you don't need it for an emergency and lock it away for 2-5yrs in a term deposit and keep reinvesting it's worthless having a bank really. May as well get a house and make sure your return is 4-6%.. oh wait, what's that. The market skyrocketed with investment buyers and swung the stock to record levels and everyone went into panic and now can't afford to?.. Wonder why..

Like someone else worked out, even if you get these 'appealing' looking short term deposits, the big key is in the PA.. per annum. Annual, being a year. So calculation needs to be based around a 12mth term to get true figures in monthly interest which is most cases is SFA, or as close to a standard .2-2% saver anyway.

I'll admit. I don't have a Kiwisaver. I see myself controlled enough not to have not needed one with the spread savings I have. I've also not really worked out the potential gains to see if they would be better off than now. Everyone tells me 'free money', But the whole locking it away and not being there for use like the option I have now or with shorter terms daunts me.

rayonline

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#2039563 18-Jun-2018 11:47

dunnersdude:
rayonline:

dunnersdude: The point is if the funds are required on call, is there a better option than Heartland's option, or is Heartland not recommended for some other reason.

Even if it is Heartland. 0.55% higher. Assuming you are on a 33% tax rate. This 2.55% is gross (before tax).

2.20%. $100k = $2200 minus tax $726 = $1474.

2.55%. $100k = $2,550 minus tax $841.50 = $1,708.50

Reduces effective rate by 0.2% per month a withdrawal is required.

ANZ is 0.10%, BNZ is 0.05%.

Heartland has no bonus criteria. Can't comment on them as a bank though.

https://www.heartland.co.nz/savings-and-deposits/direct-call-account#apply

pom532

150 posts

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#2039570 18-Jun-2018 11:59

When I was using the Rabo account where you need to add $50/month, I'd wait until the start of the month when I needed to make a withdrawal and I'd move everything into the normal oncall account and then take what I needed out of that. That way you earn more than the base rate on the premium.

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