Published on April 15, 2020 5:39 am, by Pete Lalor
During the economic downturn brought about by COVID-19 governments will try to make money “cheaper” and more available for people to spend to help boost economic activity. This means interest rates will be low. Interest rates on loans, including mortgages, will be low. Interest rates on savings accounts will be lower. Interest rates on many transaction accounts will be zero.
Low interest rates are helpful if you are a borrower, but not so helpful if you rely on interest income. Compared to other people who might have their incomes affected by COVID-19 there doesn’t seem to be much relief on offer.
But, the upside is that you do have some options:
The reality for most people is they will have to use a combination of options 1 and 2. Option 3 – switching to other types of investments comes with a significant increase in risk and you should carefully consider the risks before you proceed with this option.
Adapting your spend to fit your reduced income
Many people will need to ‘tighten their belts’ as their income falls due to COVID-19. The simplest approach is to review every category of spending and find spending you don’t need and simply stop them. Then when you’ve done that go back through every category of spending and look for ways to get spend less or get better value for every dollar you spend. There is plenty of information available on our blog site to help or you can enrol in our Financial Boot Camp program or Spending Shakedown program.
Managing your savings more diligently
This is the real opportunity. It will take some time and effort, but you should be able to increase the interest you earn on your savings if you consciously and deliberately look for interest rate specials. Here are our tips for doing this:
Whilst this might all sound a bit tedious, remember, every extra dollar of interest you earn is a dollar of income you won’t have to earn somewhere else or an extra dollar of spending you can maintain.
Using MoneyBrilliant’s Optimise My Banking feature
Optimise My Banking is designed to help find ways for you to spend less or earn more on banking products. MoneyBrilliant uses your own account and transaction information to estimate the interest you earned, the interest you paid and some of the most common fees paid by bank customers and then compares this to estimates of what you would have paid, or earned if you used other bank products rather than the ones you have. That way we can show you bank products where you might have been able to earn more interest or pay less interest and fees. It’s like a giant calculator that is easy to use.
One of the key benefits of MoneyBrilliant Optimise My Banking is that it isn’t just a one-off analysis like you get from a comparison web site. MoneyBrilliant is always in the background, regularly checking your products against the others in the market and doing the cost comparison for you. Whenever we find a cheaper product or a product that might earn you more we’ll let you know.
You can read more about using MoneyBrilliant’s Optimise My Banking feature in this article.
If you have any questions about MoneyBrilliants Optimise My Banking features please contact us at firstname.lastname@example.org
This information has been prepared by MoneyBrilliant Pty Ltd (AFSL 492711, ACL 493068). This information is of a factual nature only. We are not suggesting or recommending that you take any particular course of action in relation to any financial product or service. It does not take into account your personal circumstances or objectives. If you need financial advice you should seek advice from a licensed financial adviser.
Peter is the CEO of MoneyBrilliant. He has over 20 years experience in banking, insurance and accounting. Peter has three sons, ranging in age from 16 to 3, is a sport and fitness fanatic and a volunteer firefighter. He is passionate about improving people's lives through making financial services more accessible.