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What are the pros and cons of a savings account?

Jodie Humphries avatar
Jodie Humphries
- 5 min read
What are the pros and cons of a savings account?

Whether you’re saving for a holiday, home renovations or just for a rainy day, many consider opening a savings account as a standard part of life. However, anyone new to savings accounts is likely to wonder about the pros and cons of having a savings account. To put it simply, you’ll need to choose from a range of options based on your financial situation and goals. If you’re aiming to boost your savings, an introductory saver or bonus saver account may be useful. If you’re married, in a relationship or saving with another individual, you may consider a joint savings account. You can even choose an online account that doesn’t require visiting a branch to open and managed online.

What are a savings account’s pros and cons?

When you open a transaction account, you’ll probably be encouraged to open a linked savings account as well. Having a transaction account allows you to make purchases using a debit card. Having a savings account allows you to grow the funds in the account by earning interest on any funds in the account.

Many banks ask you to open both a transaction account and a savings account at the same time. They want you as a customer, so they will encourage you to open multiple accounts to increase your business with them. Unlike your transaction account, you may need to ensure that your savings account balance meets certain conditions. These might include the balance not falling below a certain limit and making no withdrawals to maximise the benefits.

If you’re considering opening a saving’s account, some of the pros and cons of having a savings account include:


  • Opening a savings account is simple and straightforward.
  • You earn interest on your account balance, which helps you grow your savings.
  • You may be able to withdraw the funds without needing to give advance notice.
  • A savings account can help you reach your financial goals faster.
  • Your money is protected; the government guarantees your money up to $250,000 even if the financial institution goes bust.
  • Helps to build up good financial habits if you set up regular deposits.


  • Savings accounts typically have a lower return than traditional investments, such as stocks or property, but have less risk involved.
  • There may be qualifying criteria for earning interest, such as a minimum account balance, minimum periodic deposit or limit on withdrawals.
  • You’ll need a transaction account linked to the account to easily access the funds in your savings account.
  • You may need to pay a small transaction fee or account servicing fee.
  • You may be tempted to dip into your savings more than, say, a term deposit because it’s linked to your transaction account.
  • The interest rate changes. When the RBA changes the cash rate, it may impact the interest rate for your savings account. The bank may also just change the rate.

What are the advantages and disadvantages of other savings accounts?

Some of the cons listed above can be addressed by choosing the right savings account. For instance, you could open a high-interest rate online saver account, which can help you earn more interest than a regular savings account. However, the higher interest rate maybe conditional on you making small, short-term deposits. And any larger balances may only get a standard variable rate of interest.

If you and your partner have individual savings accounts, you may want to consider opening a joint account. You will then only pay the fees on one account instead of two, and you can both deposit into the account, helping it grow faster.

Some of the pros and cons of online savings accounts include:


  • Offers more convenient access, with transactions possible at all hours of the day.
  • Often higher interest rates.
  • Lower account keeping or transaction fees due to it being entirely online.
  • Quick and easy to open and manage as it’s all online.


  • Not suitable for those who prefer cash or in-person transactions.
  • Often don’t have the option to visit a branch if there are account issues.
  • Access requires a mobile phone or computer and an Internet connection.
  • Most online accounts are through newer banks that haven’t built up the reputations, good and bad, of other banks.

Some of the pros and cons of a joint savings account include:


  • Easier to qualify for interest rate bonuses with two people depositing into the account.
  • Account keeping fees will be less than that for two separate accounts.
  • Two people can build up a higher account balance which can be useful if you need to show more savings or have specific financial goals you want to reach.


  • Need to specify whether the account can be accessed by either one person or two.
  • If a spouse or partner is the other account holder, relationship issues could affect access to the account.
  • All account-holders need to agree on a savings or deposit plan and how to handle withdrawals.


This article is over two years old, last updated on April 19, 2021. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent savings accounts articles.

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