Online saving can be a great way to build up some savings fast and can be as simple as opening a high-yielding online savings account. As the name suggests these are simply accounts, which are primarily accessed by the internet – some also have branch, ATM and EFTPOS access.
The main advantage with online saving is the typically higher rates of interest paid compared with say a transaction account (also known as an ‘everyday account’). Often the fees will be lower (by comparison) too, as the institution may pass on savings associated with fewer outgoing costs required, such as costly branch overheads for instance.
Fees and charges
Indeed, online saving accounts can be fee-free, and transferring funds from a transaction account into an online savings account is a relatively simple process. Additional sweeteners can include 24-hour online account access, no minimum account balances, or limits on the number of transactions.
Compound interest benefits
That said, online saving doesn’t always come with as many bells and whistles as a transaction account. While some online savings accounts have ATM or EFTPOS access, the majority may not. Yet limited access can be a positive, as it removes the temptation to touch your savings, allowing the power of compound interest to work its magic.
Moreover, some institutions will pay bonus interest each month, but conditions may apply – such as minimum monthly deposits or limited withdrawals. A great way to ensure you get the bonus is by asking your employer to pay some of your salary directly into your online account. Bit by bit, you will see your money grow.
While never as much fun as spending money, online savings accounts are a worthwhile exercise, especially if your goal is a home deposit, holiday, a new car or you are starting a family. To make online saving work for you, ensure you sign up to an online savings account with the most competitive interest rate.
To this end, banks and non-banks are very competitive and to find an online savings account that is suitable for your objectives, compare savings accounts online today. For more information visit our detailed savings account guide or follow our news articles to get the latest savings tips.