It’s a red alert time for savers: your money could be shrinking. Only six savings accounts on the Australian market will grow your money in real terms, according to research by financial comparison website Mozo.

Savings rates are so low that when you factor tax and inflation in, 95 per cent of accounts aren’t paying enough for your money to appreciate. You need to be getting at least 4.14 per cent to make any real return if you’re a saver on an average income of $60,000.

So what can you do instead? Rather than let your money shrink in the bank, here are seven ways to beat the savings slump and get your finances back on the growth track:

Get switching

Be a “rate tart” and move your cash to the highest bidder. When that introductory rate expires, compare rates and move your money again. Enjoy hot rates while you can.

Pay down debt

Now is the time to divert your savings into your home loan or pay down credit card debt. With credit card rates averaging around 17 per cent, you need to get your balance as low as you can. Supercharge this strategy by switching to a balance transfer card instead.

Offset your home loan

If you haven’t already got an offset account with your mortgage, now’s the time. The average salary deposited into a mortgage offset account will save you around $2,000 a year in interest – and it’s tax-free.

Diversify

Mix it up to further beat inflation and boost your savings with a varied investment portfolio. Spreading your money between cash, shares, property and increased super contributions will also minimise investment risk.

Play the market

Starting with just $500 (to ensure fees don’t eat away too much) you can buy shares. It’s riskier than a savings account, but with higher potential returns. Continue investing each month and you can build up a strong portfolio.

Index funds

Exchange traded funds (also known as index funds) are an easy, low-cost way to instantly diversify and are great for newbies. Vanguard has a range of ETF options for retail investors with $5,000 or more to invest.

Managed fund

Managed funds are another way to try and beat the index but may come with higher fees, from 0.5 per cent to 2.5 per cent. For investors wanting to make ongoing contributions from their savings they can be a good option.

Remember that the savings situation is even worse for higher earners. If you’re on $80,000 a year you’ll need a savings rate 4.60 per cent to beat tax and inflation. There’s only one account that currently offers this (ME Bank) and it’s only for five months.

Kirsty Lamont is a director of Mozo.com.au, which helps Australians compare savings accounts, credit cards, insurance and other financial products.  Kirsty was one of the launch team for Virgin Money when it started in Australia in 2003, and also held a senior role at BankWest before joining Mozo in 2007.