As most of you would know by now the RBA cut interest rates this week. Even if you don’t have a mortgage this decision still affects you. If you are trying to save money, have any business investments, debt or anything that involves interest in any way, this decision affects you.
While an interest rate cut is great news for those with mortgages, it is often not so great news for those who are trying to save. They want higher interest.
I think it will be interesting to see who passes on the cut and how much in terms of mortgages. It is almost guaranteed they will all pass the cut on in regards to the interest on saving accounts.
So what can you do to make the interest rate cut work for you?
If you have a mortgage don’t fritter away the money you will now be saving. In this post I discuss ways you can make this money work for you. When interest rates are low, it is the best time for those in debt to really work on clearing it.
If you have a saving account you can compare accounts to see if you are getting the best rate. It is much easier to open a new high interest saving account that it is to switch mortgages so it is worth shopping around.
I have a couple of high interest saving accounts I have moved my money between when interest rates have changed. There are some banks/credit unions who seem to consistently offer higher interest than others. Often it is on the Big 4 who have the highest interest because they also have the highest running costs.
If you have superannuation did you know that your fund probably invest in banks? When interest rates change, profit margins change and you might want to take a closer look at your superannuation and what your fund is doing. On the one hand we don’t want banks to make huge profits because we feel like we are being ripped off, but on the other hand if they don’t make profits, shareholders (which includes many superannuation funds, so more than likely you as well) don’t make money. And since we all want our superannuation to increase, it means without realizing it, we do want the banks to make profits.
Everything in finance is interlinked. It can be frustrating at times, but sometimes it helps to step back and look at everything when it comes to interest rates, not just mortgage interest rates.
What are your thoughts? Will you be switching banks to either lower your mortgage or increase the interest on your savings?