The easiest way to find out the best flexible savings accounts on the market is to conduct an online search (see above).
A comparison website, like RateCity, is a great way to research flexible savings accounts, because it gives you the chance to compare apples with apples.
Flexibility comes in many different shapes and forms. Examples include:
- Branch access
- ATM access
- BPAY facility
- EFTPOS facility
- Cheque facility
Other examples of flexibility can include options around minimum opening deposits, minimum monthly deposits and maximum monthly withdrawals.
The whole point of flexibility is that each person is unique, so what suits one person won’t suit another. Another point worth mentioning is that all of us need different things at different stages of our life. So an account that suits us today might not be suitable tomorrow, and vice versa.
Interest rates are also important
Apart from flexibility, you might also want to take a close look at interest rates before signing up for a savings account.
There are hundreds of different savings accounts on the market, so there is also a lot of variety in the interest rates available. In fact, the difference between the account with the lowest interest rate and the account with the highest interest rate can be as high as three percentage points.
Don’t forget that interest rates come in several different flavours:
- Base interest is the minimum interest rate you’ll be paid
- Maximum interest is the interest rate you’ll be paid if you satisfy certain conditions
- Bonus interest is the interest rate you’ll be paid for a limited period (usually after opening a new account)
Please note that some savings accounts pay just the one interest rate, so for those products, the maximum rate and bonus rate aren’t applicable.
Savings accounts vs other investments
One of the great features about savings accounts in general is that they’re inherently flexible financial products. That’s because they’re easy to open and easy to liquidate.
Investing in, say, equities is less flexible, while investing in real estate is less flexible still.
Of course, that flexibility comes at a cost, because savings accounts tend to deliver lower returns over the long term than equities and real estate.
Still, you don’t have to make an either-or choice. You can use a savings account as a source of emergency funds, filling it with enough money to cover, say, three to 12 months of expenses. You could then put any surplus funds into higher-yielding investments, such as equities and real estate.
Financial Claims Scheme
Another benefit of savings accounts is that they’re covered by the federal government’s Financial Claims Scheme.
The Financial Claims Scheme, which was established in 2008, protects deposits in banks, building societies and credit unions if one of them collapses.
Each account holder at each institution is protected for up to $250,000. So if, say, you had $350,000 in one account and the institution collapsed, the first $250,000 would be protected but not the other $100,000. However, there is a way around this problem – divide the $350,000 between multiple accounts so that no one account has more than $250,000.