A survey by Colonial First State found 57% of the 11 million Australians receiving their 'Stage two' personal income tax cutsthe equivalent of almost $40-$50 a week extra for low and middle-income earners - planned to save it.

Comparatively, only 22% said they intended to spend the extra money, despite the rationale for bringing forward the tax cuts being to stimulate spending and boost economic recovery. 

Need somewhere to store cash and earn interest? The table below features savings accounts with some of the highest non-introductory and introductory interest rates on the market.

Provider

4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • Bonus rate for the first 4 months from account opening
  • No account keeping fees
  • No minimum balance

High Interest Savings Account (< $250k)

  • Bonus rate for the first 4 months from account opening
  • No account keeping fees
  • No minimum balance
010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • Deposit at least $1,000+ each month from an external source
  • Make 5 or more eligible transactions
  • Grow your savings balance each month

Savings Maximiser (<$100k)

  • Deposit at least $1,000+ each month from an external source
  • Make 5 or more eligible transactions
  • Grow your savings balance each month
010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • Earn up to 5.40% pa by depositing $1,000 in the previous month
  • No account fees
  • Easy access to your money

Saver Account (<$250k)

  • Earn up to 5.40% pa by depositing $1,000 in the previous month
  • No account fees
  • Easy access to your money
4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking
  • No withdrawal notice periods or interest rate penalties

Savings Account (Amounts < $250k)

  • A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking
  • No withdrawal notice periods or interest rate penalties
05001$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • Maximum Age - 24

Goal Saver

  • Maximum Age - 24
02000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • Download the App to open your account
  • No monthly fees on any of your Save accounts
  • Deposit $200 per month to activate bonus interest

Save Account

  • Download the App to open your account
  • No monthly fees on any of your Save accounts
  • Deposit $200 per month to activate bonus interest
0200$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • No fees or penalties for withdrawing money
  • Savings guaranteed up to $250,000
  • Maximise your savings and reach your goals faster with Auto-Savings

Bonus Saver Account (Amounts < $250k)

  • No fees or penalties for withdrawing money
  • Savings guaranteed up to $250,000
  • Maximise your savings and reach your goals faster with Auto-Savings
010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
For customers aged 14-35 years
For customers aged 14-35 years

Future Saver Account ( < $50k)

    010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

    Boost Saver

      Important Information and Comparison Rate Warning

      All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of June 19, 2024. View disclaimer.

      Nearly a fifth (17%) meanwhile said they would put the extra money towards their mortgage repayments - good news perhaps for mortgages still in deferral - while 16% planned to invest in the stock market with it.

      Only 11% said they planned to use their tax savings to pay off high interest debt such as credit card and buy now pay later accounts.

      Colonial First State General Manager Kelly Power said the tax cuts would still provide a much-needed boost to the economy.

      "For many Australians hit hard by the Coronavirus-led recession, the personal income tax cuts brought forward by the government in this year’s Federal Budget have been well received, alongside a range of other measures, as much needed support," Ms Power said.

      “We know that a lot of Australians have been doing it tough and the focus for many has been on navigating the current uncertainty.

      "Whether Australians decide to save or spend, it’s about being savvy about what you use the extra cash for. A little can go a long way and if used wisely, the income tax cuts can provide an additional boost to your overall financial position."

      However, Ms Power also said Australians should begin to think about rebuilding their wealth moving forward.

      Rebuilding super not a priority 

      2020 has been a tough year for superannuation, with the government's early access to super scheme in response to the coronavirus seeing more than $35 billion withdrawn at the time of writing. 

      More than 3.4 million different Australians have used the scheme at an average of $7,400 each, and over the June quarter, the total value of Australian super assets fell for the first time as Aussies raced to raid their retirement funds. 

      While most withdrawals were made out of necessity, others did so to spend on discretionary items like clothing, to pay off debts, or even to fund gambling expenditure

      Despite 16% of respondents admitting to withdrawing from their super, only 6% of respondents said they planned to use their extra income to top up their super, making it the least popular option. 

      “The research indicates that those who have needed to access super early as a way of surviving income loss, particularly younger Australians, are not making rebuilding their superannuation a priority," Ms Power said. 

      “As we begin to emerge on the other side of the pandemic, it’s important to start thinking about the long-term impact your super withdrawal could have on the quality of your retirement."

      In its super withdrawal estimator calculator, ASIC's MoneySmart found someone withdrawing $10,000 in their twenties could result in them being up to $25,000 worse off when they retire at 67. 

      Withdrawing the full $20,000 would make them $50,000 worse off. 

      $10,000 early super withdrawal

      Age

      Years to 67

      The estimated reduction in balance

      20

      47

      $26,436

      30

      37

      $21,516

      40

      27

      $17,512

      50

      17

      $14,253

      Source: ASIC Moneysmart

      "Seemingly small decisions now could have a big effect on the kind of retirement you’ve always dreamed of," Ms Power said. 

      “Everyone’s circumstances are different so whether you decide to spend it, use it to pay down debts, build up savings or make super contributions, it’s important Australians put the money towards what matters to them."

      Photo by Caleb Martin on Unsplash