Looking for a new savings account? Here’s how to choose one that’s best for you.
If you’re in the market for a new bank account to help you save, it’s important first to be clear on your financial and lifestyle ambitions. That will help you filter through the options available to you and choose one that best suits your needs.
It’s also important to choose an account that suits the way you save, giving you the best chance of reaching your goals.
Here, we compare four different kinds of accounts, to help you make the right decision for your circumstances – and make the most of your savings.
1. A high-interest savings account, with no deposit conditions
Key benefits: Interest rate, flexibility
Savings accounts with high interest rates are a popular choice for Australians. These accounts ensure your money is working as hard as it can to help you build your balance, and your money is still readily available to you.
When you’re looking for the best high-interest account for you, it’s important to consider whether the account has conditions that might restrict you from receiving the interest rate you signed up for – for example, you might need to maintain a minimum balance each month. Ask yourself: are you likely to commit to the conditions, or do you need a lower maintenance approach?
If you want a savings account that is both flexible and still offers a competitive interest rate, you could consider scanning the market for a high-interest savings account with deposit conditions you can meet – or better yet, no deposit conditions at all.
Did you know?
Deposit conditions are catching out Australian savers. Research shows 71% of Australians have at least one restrictive condition on their savings account. In addition, two-thirds of Australians aren’t receiving their maximum bonus interest rate each month.
2. A transaction account
Key benefits: Flexibility, convenience
Transaction accounts are generally designed to support your spending needs. They typically have a card linked to them and are often the option used for your everyday life. A transaction account might also be the one you prefer to rely on overseas, with either a digital or physical debit card.
Even your transaction account can support your savings goals. For example, you should check the fees you’ve signed up to, to make sure you’re not parting with your money unnecessarily. This includes when you’re travelling internationally or withdrawing cash from an ATM. Better yet, you could consider a transaction account that doesn’t charge fees at all, including no international account fees on overseas purchases.
Finally, make sure you’re making the most of the features your transaction account has to offer. For example, you might be entitled to discounts and other benefits, which can add up over time.
3. A term deposit
Key benefits: Interest rate, consistency
If you’re looking for consistency over a certain period of time, a term deposit could be your answer. With a term deposit, you select an investment term – for example, six months – and receive the same interest rate throughout that term.
To achieve that consistency as a saver, you have less flexibility than you do with a high-interest savings account. For example, with a term deposit, in order to receive the rate you signed up for, you need to keep your funds locked up for an investment term. Withdrawals during the term are often restricted and may incur fees.
Use this calculator to find out how much you can save with a term deposit, over different investment terms.
4. A cash management account
Key benefits: Visibility, interest rate
A cash management account, as the name suggests, is designed to help you manage your money. You can think of it as a central hub that makes it easier for you to invest and monitor your savings.
It also helps you keep track of your income and expenses, which is one of the many reasons it can be suited to people who have a self-managed super fund (SMSF) and need to stay up to speed with things like pension payments and contributions.
If you haven’t used a cash management account before, and you’re wondering if it’s right for your goals, you can read more here about its benefits and features.
Help your money gain momentum
There are a range of accounts on the market designed to help you save at different stages of your life and for different circumstances.
That’s why it’s important to be clear on your goals and motivations before you begin your search for a savings account, ensuring you’ve got the right set-up for your ambitions, so your money can gain momentum.
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