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Best Savings Choices
When it comes to investing your money, what are the best savings choices out of Cash Management Trust Accounts (CMT) and online savings accounts?
CMT Accounts: These types of accounts were very popular during the 1980s and 1990s, and are still used by many Australians today.
They can be described as a term deposit and an everyday transaction account rolled into one. To open one of these accounts, a minimum deposit is usually required and there are no set terms so you can access your funds at any time.
Online Savings Accounts: Now that the internet is as popular as it is, many institutions have taken their savings accounts online and now offer a range of online savings accounts and typically offer more competitive rates than CMT accounts.
The differences between the two types
Besides the difference in interest rates, there are a few other differences between both of the accounts that you should be aware of when deciding which account is best for you:
- Some CMT accounts may request that you outlay an initial deposit to open up the account, for instance Macquarie Bank require $5,000. Online savings accounts, however, typically require a much lower or no minimum deposit.
- Both accounts allow you to access your money at any time (however there may be some delays to receive the money), however CMT accounts may put limitations on the types of transactions such as they may not have cheque and credit card facilities.
- When it comes to fees, CMT accounts may charge management and ongoing fees while online savings accounts usually don't charge any fees. Make sure you check with the institution for all fees and charges before applying.
