savings accounts (1)

Advantages and disadvantages of a savings account

Weigh up the pros and cons of having a savings account and decide if it’s the right option for you.

If you’re saving for a rainy day or a holiday, keeping your money under your bed is not the only way to reach your goal.

Most banks offer multiple types of savings accounts so it's important to weigh up the pros and cons before choosing.

High Interest Savings Account Offer

Bankwest Hero Saver

2.60 % p.a.

max rate

0.01 % p.a.

standard variable rate

High Interest Savings Account Offer

Ongoing, variable 2.60% p.a. rate when you deposit at least $200 each month and make no withdrawals. Available on balances up to $250,000.

  • Maximum Rate: 2.60% p.a.
  • Standard Variable Rate: 0.01% p.a.
  • Monthly deposit required: $200.00
  • Monthly fees: $0.00
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Rates last updated September 20th, 2017
$
$
months
Name Product Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees Min Bal / Min Deposit Interest Earned Product Description
Bankwest Hero Saver
2.60%
0.01%
2.59%
$0
$0 / $0
Ongoing, variable 2.60% p.a. rate when you deposit at least $200 each month and make no withdrawals. Available on balances up to $250,000.
ME Online Savings Account
2.95%
1.30%
1.65%
$0
$0 / $0
Ongoing, variable 2.95% p.a. rate when you link to a ME Everyday Transaction account and make a weekly purchase with your Debit Mastercard using tap & go. Available on balances up to $250,000.
HSBC Serious Saver
3.00%
1.60%
1.40%
$0
$0 / $0
Introductory rate of 3.00% p.a. for 4 months, reverting to a rate of 1.60% p.a. Available on balances below $1,000,000.
Westpac Reward Saver
1.50%
0.01%
1.49%
$0
$0 / $0
Ongoing, variable 1.50% p.a. when you deposit at least $50 and make no withdrawals each month. Available on the entire balance.
St.George Maxi Saver
3.00%
1.00%
2.00%
$0
$1 / $1
Introductory rate of 3.00% p.a. for 3 months, reverting to a rate of 1.00% p.a. Available on the entire balance.
Bank of Melbourne Incentive Saver
1.75%
0.01%
1.74%
$0
$1 / $1
Ongoing, variable 1.75% p.a. when you make at least one deposit and no withdrawals each month. Available on the entire balance.
Westpac eSaver
2.51%
1.00%
1.51%
$0
$0 / $0
Introductory rate of 2.51% p.a. for 5 months, reverting to a rate of 1.00% p.a. Available on the entire balance.
BankSA Incentive Saver Account
1.75%
0.01%
1.74%
$0
$0 / $0
Ongoing, variable 1.75% p.a. when you make at least one deposit each month and no withdrawals. Available on the entire balance.
Citibank Online Saver
2.85%
1.70%
1.15%
$0
$0 / $0
Introductory rate of 2.85% p.a. for 4 months, reverting to a rate of 1.70% p.a. Available on balances below $500,000.
BankSA Maxi Saver
3.00%
1.00%
2.00%
$0
$1 / $1
Introductory rate of 3.00% p.a. for 3 months, reverting to a rate of 1.00% p.a. Available on the entire balance.
Bank of Melbourne Maxi Saver
3.00%
1.00%
2.00%
$0
$0 / $0
Introductory rate of 3.00% p.a. for 3 months, reverting to 1.00% p.a. Available on the entire balance.
HSBC Flexi Saver Account
2.50%
1.25%
1.25%
$0
$0 / $0
Ongoing, variable 2.50% p.a. when you deposit $300+ each month (other conditions apply). Available on balances up to $5,000,000.

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Q. What are the advantages of a savings account?

Boost your balance

The ability to earn a high rate of interest is just one of the benefits of this type of cash investment.

Start with a little

You don’t need any money to open a savings account. There’s no minimum balance requirement and you can withdraw as much as you like as often as you like.

Set up an automatic savings plan

Features such as an automatic savings plan makes saving simple. This feature automatically debits your transaction account when you get paid so that you can “pay yourself first”.

Kickstart your savings plan today.

Joint accounts

You can open savings accounts with your partner so that you can save together.

Compare joint savings accounts and meet family goals.

Make withdrawals whenever you want

Savings accounts are on-call deposit products and you can withdraw your money whenever you want. However, you may loose your bonus interest if you make withdrawals.

Did you know?

Christmas Club savings accounts are a special type of savings account that can help you save for a specific goal, like the Christmas holidays. You’ll pay a penalty if you want to access your money before the withdrawal period (usually between January and November), which will help you to stay disciplined with your savings.

Earn interest on your savings

Financial institutions pay you interest on your savings account balance. You’ll get a percentage of your balance back from the bank every year.

There’s bonus interest too

As well as the base variable rate of interest, financial institutions will sometimes offer a bonus interest rate. You’re rewarded with the bonus rate if you meet certain conditions such as maintaining regular deposits and not making any withdrawals, and bonus interest can also be paid to new account holders for an introductory period. At the end of the introductory period, your savings account balance will accrue interest at the base variable rate of interest.

You’re free to keep chasing bonus interest

You can keep switching savings accounts to take advantage of bonus interest periods.

Savings accounts are free to open

Savings accounts cost nothing to open and there are no monthly fees.

No lock in period

You’re not locked in for any period of time and you can switch savings accounts as often as you like.

End up with a lot

Interest compounds. This means you can earn interest on interest. Read up about how compound interest can exponentially grow your savings balance.

Your money is safe

If your financial institution goes bust, the government will guarantee your savings account balance up to the value of $250,000.

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Q. What are the disadvantages of a savings account?

Rates will change

One key disadvantage is that savings account interest rates are variable; financial institutions are free to set and change interest rates as they wish.

Consumer deposit products such as savings accounts and term deposits make up roughly half of the funding mix, which is where the banks get the money to fund other parts of business like mortgage lending.

A record low cash rate (with a forecast to stay low for the next couple of years) coupled with changes to banking laws makes term deposits a better option for long term investments. High-interest savings account rates will stay largely in line with the movements of the cash rate, whereas term deposit rates may increase, or at least stay stable, in the coming years.

How to maximise your savings in a low interest rate world.

Temptation to spend

Savings accounts are on-call products, meaning you can access your money whenever you want. Although this can be beneficial, a term deposit may be a smarter option if you’re easily tempted and likely to dip into your savings.

Remember, many bonus interest savings accounts have conditions around withdrawals. If you make a withdrawal, you’re not going to get the extra interest.

Advantages and disadvantages at a glance

FeatureAdvantagesDisadvantages
Interest earnedWith a high interest savings account, the interest earned on your balance could add up, particularly with compound interest.On the flip side, a savings account comes with variable interest rates and as such, it is subject to change. Recent RBA announcements have seen the record low cash rates and it looks to remain low for the next couple of years.
At-call accessAt-call deposit accounts allow you to access your funds whenever you need it - a reassuring feature should you run into emergencies.The ability to access your savings any time may increase the risk of spending it.
No lock in periodYou’re not locked in for any period of time which means you can switch savings accounts as often as you like.With no lock in period, there is potentially no incentive to commit to any minimum monthly deposits.

There are a number of benefits to having a savings account, including bonus interest rates, savings plans and online access. Be sure to look at the different ways you can grow your savings before applying for a product. Set-and-forget investments such as term deposits can be a handy product to use alongside an on-call savings account.

Shirley Liu

Shirley is finder.com.au's publisher for banking and investments. She has completed a Masters in Commerce (Finance) and is the author of hundreds of articles. She is passionate about helping Aussies make an informed decision, save money and find the best deal for their needs.

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Savings Account Offers

Learn about our information service
ME Online Savings Account

Maximum Variable Rate

2.95

Standard Variable Rate

1.30
Citibank Online Saver

Maximum Variable Rate

2.85

Standard Variable Rate

1.70
Bankwest Hero Saver

Maximum Variable Rate

2.60

Standard Variable Rate

0.01

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