Savings Accounts

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An Overview of How Savings Accounts Work

Australian Banks offer a range of different options for saving your money and making it grow. Different types of account are suitable for different types of saver, and finding the right choice is important in ensuring you are making the most of your money. Our comparison tables present all the best savings accounts currently available and the essential features and information so you can compare the packages and find the best account for you.

Saving accounts are designed so your money can work for you, earning interest on your investment and helping provide security for the future. Separating your investment from your everyday checking account helps simplify managing your finances. When you are looking for a suitable savings account, calculate how much you can afford to save, how often you will make deposits and what kind of access you want to your money.

Short-term savings can be used for regular payments and purchases such as mortgages and rent, monthly bills, insurance and tax. Medium-term investments can be made with the aim of making larger purchases such as a new car, furniture, a new computer or to pay for a holiday. Long-term savings can play an important role in the big events that punctuate our lives: saving a deposit for a home, helping to pay for starting a family and putting children through education, buying a second house, putting money aside to enjoy during retirement or to leave as an inheritance. The intended length of your investment, your plans for the future and ongoing financial circumstances should determine your choice of account and the way you manage any investments.

Standard savings account are suitable if you have some money to put away and grow but want to be able to access the funds whenever you want or need to. Term deposits are an excellent choice if you want to invest your money for a fixed period and are comfortable with not accessing your money for the agreed length of time. This type of account can be a good way of saving money for a particular purpose, growing your funds at a higher interest rate, and then enjoying the rewards when the time is right. Online accounts also tend to offer a higher interest rate and are a convenient way of investing remotely without the need to visit the bank.

When you are comparing savings accounts, there are several important features you should take into consideration to find the account that offers the biggest returns on your investment. The interest rate is crucial – the higher the rate, the more your investment grows. The interest rate is either a variable or fixed rate, and there may also be a bonus rate for certain levels of monthly deposit or a special rate for an introductory period. Along with looking for the account offering the best interest rate, you should also choose a package that features no charge for opening the account and no transaction fees.

Savings accounts sometimes feature a minimum deposit or balance; if so, choose one that suits the size of your investment. Other features to take into consideration are how much access you have to your savings, the types of cards the bank provides for the account and what online services are available. If customer service is important to you, check out what financial advice and support the bank offers to account holders.

You have worked hard for your money – by using or comparison tables you can choose the right savings account and make your money work for you, generate the most returns and achieve you financial goals.

Tips for Maximising Saving Account Benefits

Choose an account with the right amount of access: Term deposits, notice accounts and similar types of savings account generally offer higher interest rates, but your access to the money is significantly limited. Standard savings accounts tend to offer slightly lower rates of interest, but more flexibility in withdrawing funds. Make sure the terms of the account and levels of access suit the way you want to manage your finances.

Budget to calculate how much you can afford to save: Work out how much money you can afford to put away initially and how much you can continue to deposit into your savings account. Saving is a great way for planning for the future, but shouldn’t mean that you struggle with everyday spending. Also, it is important to concentrate on paying off any debts you have before focussing on saving – the interest you pay on debts is likely to be more than the interest you earn on savings.

Regularly review your savings account: You should regularly check your account to make sure your savings are generating the best returns. If you account has a bonus interest rate for an introductory period, be aware of when the promotion ends and how the rate changes. Whatever type of account your savings are in, you should regularly review the financial health of your investment – if you’re not getting the best returns it could be time to move your funds into a more rewarding account.

Common Savings Account Features

Interest rates: This is one of the most important features to compare when choosing a savings account – the amount of interest your investment will earn. The interest is calculated and expressed as an annual percentage rate (APR). Check when interest is applied as some accounts may apply interest on the balance at a set date per month, or daily, which is better.

Monthly fee: Some banks charge a monthly fee to manage your savings account. There may also be transaction charges or penalty fees for breaking the restrictions on your account. Always check the terms and conditions before opening a savings account so you are aware of all the rules and regulations, fees and charges.

Minimum balance: The minimum amount of money you need to have in your account to keep it active and earning interest. If you plan on moving some of your savings out of the account, make sure you have enough in to avoid going under the minimum balance.

Introductory interest rates: Some savings accounts offer new customers a special introductory interest rate for a promotional period, typically four to six months. When the promotion ends the rate reverts to a lower level. When you are comparing different accounts, this promotional rate is an important factor. However, if you are a long term saver and would like an account that you can keep indefinitely, the basic interest rate may be a more important factor in your decision.

Bonus interest rates: Many savings accounts feature a bonus rate, which rewards customers for making monthly deposits above a specified amount. If you are comparing the features of two similar accounts, the one with the better bonus rate will help your investment grow faster.