If you are looking for some money savings tips we’d suggest an online savings account is a great place to start. Piggy banks have become a thing of the past as you can now deposit and manage your savings online, while earning interest on top.
What is an online savings account?
An everyday online savings account will pay you a high interest rate on your deposit every day for the life of your account. This is different to a high-interest online savings account, which usually offers a high interest rate or ‘bonus interest rate’ for an introductory period.
Introductory periods usually stem from three to six months. But once they end, the interest rate will revert back to the institutions variable rate.
To avoid any unwanted surprises, make sure you are aware of what the variable rate is before applying for a new product.
Variable rates are subject to change without any notice period. So if your current rate is already quite low, chances are that you will not receive any significant benefit with any Reserve Bank movements.
Common features of an online account
- Low or no account keeping fees
- High variable interest rate
- No introductory or bonus interest rate periods
- Manage your account online 24/7; see your account balance, transaction history and interest earnings
- No need to switch banks, just link your everyday online account to an existing bank account
- Unlimited transactions, transfer money in and out as often as you like
- Automatic transfer facilities
- No minimum balance
- No fixed term
- Quick and easy online applications, no need to walk into a branch
How can they afford to offer such high rates?
Because there are no branches and no staff to employ, online accounts remain a relatively cost and effective business channel for banks and institutions. Overheads on a day-to-day basis are much lower as there is less face-to-face customer service involved. And as a result, institutions are able to pass on the savings to their customers in the form of higher interest rates and lower fees.
If you are thinking about opening an everyday online account, look for one with a relatively high interest rate, and no account keeping fees. Shop around online to find the best interest rates available. Use our savings account calculator to work out how much accumulated interest you could be earning on your regular saving deposits. To make things easier for you, we have put together a table for online savings accounts and sorted this by highest interest rates and have a detailed savings guide to walk you through the ins and outs.