After a brief honeymoon with NAB, she hopped over to Commonwealth Bank and now she's got ING Direct in her sights.

The 25-year-old accountant/auditor from Southbank, Melbourne is cashing in on special introductory rates offered by banks to win your business, a strategy that is no doubt popular in a market where interest rates are at record lows. After the introductory period expires – usually three or four months – the rate reverts back to the standard variable, at which point Jong switches.

It's not an easy or foolproof strategy. Some banks have stringent conditions, such as a proviso that you must have another fee-generating account with them to qualify for the special rate. It also takes Jong several hours of research to read the fine print.

But the switcheroo has made her about four times what she would earn in interest from a regular savings account and offered far more flexibility than a term deposit.

"With term deposits you have to lock your money away for many months to get the higher rates, so I started to look at other options," she says. "I realised NAB had the Reward Saver account and thought the other banks would have equivalents and they do."

Unlike term deposits, which are conditioned on holding money in an account for a set period of time, so-called bonus saver accounts give customers bonus interest when they top up their savings by a set amount each month. That interest is generally anywhere between 2 per cent and 3.5 per cent a year. In a time where cash is certainly not king, it's not bad.

 

Comparing rates

The best introductory rate on the market at the moment is RaboDirect's High Interest Savings Account. It offers savers 3.5 per cent a year. for the first four months, then it drops to 2.55 per cent, according to finder.com.au.

There are eight savings accounts currently offering honeymoon rates, but there are traps too, says finder spokeswoman Bessie Hassan.

"When comparing savings accounts, check the length of the bonus or honeymoon period and the amount to which the maximum rate applies to," she says. "For instance, the honeymoon rate may only be offered on balances up to $250,000."

She also warned savers not to be lured into switching accounts just for the introductory rate because when the rate expires it may fall back to the base or variable rate. Sometimes that rate is below the official Reserve Bank interest rate of 1.75 per cent.

Jong says she's aware the rates drop significantly after the honeymoon ends, which is why she shifts. However, given the savings accounts don't have fees, she is tempted to keep her current Commonwealth Bank one open.

There will come a time where Jong has exhausted the introductory rates, which is why she looks for compelling base and variable rates when choosing an account.

Hassan says savers need to think about how the combination of the honeymoon rate and subsequent rate will get them to their desired balance. "Typically, a three to four month honeymoon rate may be a good deal if the base interest rate over the life of the savings account is going to achieve your savings goal," she says.

How to pull it off

If you want to boost your savings with a honeymoon rate, a good starting point is looking beyond the Big Four to see what's on offer. Rate comparison sites including finder.com.au, Rate City, Canstar and infochoice.com.au can help.

Signing up to your first account will be easy, switching will take a bit of time, says Jong. "Moving from NAB to Commonwealth was not a headache. With ING ... it will take a while," she says.

Be prepared to ask questions about how long the honeymoon rate lasts, what the base or variable rate is, how often you have to make deposits and whether there is a cap on how much you can save at bonus rates. Also calculate whether fees from other accounts with the institution and a drastic interest rate drop after the honeymoon ends will offset the benefits of the interest in the first few months.

"I think anyone can do it," says Jong. "You just have to be active in searching for what rates you want and reading the terms and conditions."