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Hight intrest saving account bonuses

Discussion in 'Finance & Banking' started by nevsutt, 3rd Feb, 2013.

  1. nevsutt

    nevsutt Member

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    While looking at high interest savings accounts I came across a website that use a strategy that was to take advantage of the bonus being offered
    What they suggested was to open an account that have a high interest bonus period and put money in their until the end of the bonus period
    Then close the account down and move the money into another account (different bank ) that offered a high interest bonus until the bonus period ended and then do it again
    Realistically can this be done
    How many accounts can 1 open and close in a set period of time ?
    I would have thought there would be a minimum time a bank account can be open for
     
  2. Fi

    Fi New Member

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    It depends on the individual bank and account. You need to read the product information for any you want to set up. Some do say you have to hold it for a minimum period, others don't. I have done this over the years and have also kept several accounts open at different institutions and swapped money backwards and forwards as the interest rates go up and down, just ensuring I maintain the minimum balance required to keep the account open and/or not be penalised. I prefer to choose ones that have no minimum balance though.

    I have never heard of a limit on how many you can hold across different institutions but some may say that you can only have so many at their own. I prefer to choose accounts that have a high rate with no bonus period. I find their rates are more consistent over a longer period so there isn't the need to open new accounts as often. Often the ones with the bonus, drop considerably after the period, ensuring the need to move your money quickly. There are ones out there offering ongoing (variable) rates close to the 'bonus' rates that others offer. You can also find ones that give you a 'bonus' amount for regular deposit amounts and no withdrawals instead of a 'bonus period'. As I said, these rates are variable, but if you keep an eye on it you can move the money around if it drops or you see something better come on the market instead of having to after the 3mths or 5mths etc that the bonus period ones offer. I am no expert but I have noticed they usually alter when the reserve bank increases or decreases rates so it is easy to keep track of.
     
  3. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Often these bonus rates are something like 0.5% or less.

    Do the sums. On $10,000 invested for 1 month, earning 0.5% gets you around $4.20 extra.

    Is it really worth all that effort for an extra $4.20 per month (or less)?

    Also - be aware that there is some reporting that goes on in regards to bank accounts from an anti-fraud/anti-money-laundering point of view, so if you are doing this regularly, you might get flagged by the bank's automated systems.
     
  4. nevsutt

    nevsutt Member

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    UUUMM Yes?????

    Why is that
    Thats why I asked
    Is it Illegal????
     
  5. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Unless you have a LOT of money to invest, I suggest you go get yourself a part time job - at minimum wage, you'll earn yourself more in one hour that you will from spending all the time required to move your money around month-by-month.

    At the end of the day, you need to work out what your time is worth. If it takes you an hour to make the changes each month and you make an extra $4 as a result, you've just effectively made $4 per hour.

    I used to make close to $20 per hour delivering pizzas on Friday and Saturday nights when I was in uni 20 years ago! I try to avoid working for less than that.

    I don't think it is illegal - you just might find yourself being scrutinised by the AFP because it is rather unusual behaviour. Edit: I should note that this probably only applies if you have a fairly large sum invested ... I'm sure they really won't care about you moving $5,000 around.
     
    Last edited: 12th Feb, 2013
  6. Fi

    Fi New Member

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    With everything online these days I have never found it takes more than a few minutes to set up a new account and move money around. For those who don't have a lot of money or who are starting out, even a small amount of interest adds up over time.

    If you can do a regular savings plan and no withdrawals, then you will find some that will give you a good ongoing bonus rate instead of just a brief bonus period. Have a look at UBanks Usaver account to see what I mean. This way you won't have to keep moving your money around as often.
     
  7. nevsutt

    nevsutt Member

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    Sorry I thought this was a Forum to do with Investing

    AFP????
    I have been told this is normal behavior particularly those with SMSF
     
  8. nevsutt

    nevsutt Member

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    Fi

    Why did you delette your Post
    Your comments where very Valid
     
  9. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    My point was that going to a lot of trouble to save $4 might not be worth your time. It all depends on how valuable your time is.

    Spend your time doing what is going to get you the best return.

    The other thing to watch out for is "dead time" - if there is a period of time where your money is not earning anything at all (because the bank is "processing" something), then you need to take this into account in your calculations. Losing several days worth of interest every month is going to eat into your returns! Naturally, this depends on your situation and how the banks handle your money when you transfer it and such.

    I did note that this probably only applies if you have a fairly large sum invested (hundreds of thousands I'd guess) ... I'm sure they really won't care about you moving $5,000 around.