You may have made the decision to move your extra money into a savings account but don’t congratulate yourself just yet.
At first glance it may appear that all savings accounts are created equal, they all help you work towards your goal by providing interest payments on your total.
But don’t be fooled, there are a few key features to think about when choosing the best option for your needs. Use the following checklist when comparing accounts to make sure your money will be working hard for you:
A savings account is different from an everyday or transaction account in that its main goal, as the name suggests, is to help you save money. As such, they usually offer higher interest rates than a transaction account to help you grow your savings faster.
The best way to make the most of this advantage is to look for a high-interest savings account that calculates interest daily and pays monthly. This enables you to earn interest on your interest. The highest interest rate listed on RateCity is 3.6 percent with ME Bank which is only applicable if you open a transaction account with ME as well.
Keep in mind when looking for accounts that many banks offer higher introductory interest rates for four or six months to attract new customers, with the rate reverting to a standard variable interest rate after this period. It is important to check what the base rate will be once you are past the introductory stage so you know if you’re really getting a good deal.
Also keep an eye out for accounts that have special offers such as bonus interest when you make a deposit but no withdrawals in any given month.
Everyone knows you can achieve your financial goals faster if you are paying zero fees on your savings. Fees on savings accounts are practically a thing of the past now days with online access cutting costs for banks and the savings being passed on to the customer. If you are paying any fees on your account it is certainly time to switch.
Some savings accounts require a minimum or maximum balance, and you may need a minimum opening balance. On top of these conditions some accounts also require minimum and regular deposits to be made generally on a monthly basis. If you are employed casually or can’t guarantee your ability to make regular deposits you may be forfeiting the high interest rate that you signed up for. Keep this in mind when comparing accounts and choose one that not only has a high interest rate and no fees but that suits your lifestyle and income.
Considering their purpose is to help you save, some savings accounts restrict access to your money to encourage you to leave them untouched. If easy access is important to you, look for an account that allows you to make withdrawals whenever you like. Online-only banks generally do not offer ATM access, so you will need to link your savings account to a transaction account for transfers and access to your money.
The Australian Securities & Investments Commission recommends ensuring that your chosen account is offered by an Authorised Deposit-Taking Institution (ADI). ADIs are regulated by Australian Prudential Regulation Authority (APRA), which means your money is safer in their hands. You can check APRA’s list of ADIs online for added safety if you are looking to take out an account with an institution you are unfamiliar with. All accounts listed on the RateCity website are offered by ADIs.