Not all savings accounts are created equally, and your spending and savings habits will impact which savings account type may best suit your financial situation.
Here is what you need to know to ensure you’re searching for the right savings account for you:
If you’ve got a set savings goal in mind and want to meet it in an exact time frame, then you may want to consider a conditional savings account type. Compared to standard savings accounts with introductory rates, disciplined savers may benefit from the often-strict conditions to earn a high interest rate on an ongoing basis.
You’re discouraged from dipping into your savings by no-withdrawal criteria or rules around maintaining a minimum balance. You’re also encouraged to make regular deposits to boost your savings by minimum deposit criteria. All of this may help you to meet your savings goal in your chosen time frame.
If you’re more relaxed in your savings habits and just looking to save a portion of your income for a rainy day, you may want to consider a regular (also called standard) savings account. This type does not come with conditions you need to meet to earn its interest rate.
Further, regular savings accounts typically come with a higher interest rate for an introductory period (3 – 6 months), which then reverts to a standard variable rate. This allows you to set-and-forget your savings and cuts out the hoops you need to jump through just to earn interest.
This type also may suit those who cannot meet ongoing savings account conditions each month, such as those employed casually who can’t meet the monthly minimum deposit limit.
Whether you’re a tech-savvy saver, or just a fan of helpful features, online savings accounts and neobank savings accounts may help you to meet your savings goals faster thanks to helpful savings tools. They’re typically on the forefront of fintech, such as Round-Up tools, which allow savers to transfer all the spare cash to the nearest $1 or more between their earnings and expenses to their savings account.
Further, online savings accounts typically offer higher interest rates and fewer fees as these providers can keep overheads low by cutting out branches and other expenses. If you’re not a fan of online banking, and prefer face-to-face customer service, this savings account type may not suit your financial situation.
- Teaching financial literacy
You may have children and want to start teaching them about finances and securely store their pocket money. This is where children’s savings accounts may come in handy. Kids will begin to understand the banking system and may learn about saving your “income” (pocket money) and budgeting for something you want, like toys or electronics.
You may also take advantage of linked educational savings apps to further teach your children financial literacy. These accounts often come with higher interest rates than adult accounts, but also may have higher fees, and come with strict rules around usage to prevent misconduct.