With so many savings accounts on the market, it's important to compare how each product could help you reach your financial goals.
A savings account is a secure way of managing excess money, while also earning a return on the investment through interest payments. These types of accounts are structured in a number of different ways. Some provide total access to your money while others offer incentives for not spending your savings. Before choosing a banking product to help you reach your financial goals, it's important to understand how they differ.
To help you find a savings account that suits your needs, read our guide to comparing below.
Compare savings accounts
- Select the relevant tab that best suits your interest
- Fill in the fields to calculate your savings
- Select 'Calculate'
- Compare savings accounts the table
- Click 'Open' to open an account, 'Go to Site' to go to the bank's site or 'More' to read our review
How does a savings account work?
There are five basic types of savings accounts that you can consider for depositing your money:
1. Savings or high interest savings accounts
2. Notice savers
3. Term deposits
4. Cash management accounts and
5. Retirement or SMSF accounts.
Each of these have different structures and features that makes them ideal for serving specific functions.
The base workings of a savings account are all the same: you deposit money into the account and interest is paid on the balance. Each type of savings account will have variables, such as access to your money, monthly fees, interest rates and online management. Before comparing all of these features, you should first decide which type of account is suited for your needs.
A savings account is your basic savings product that provides a safe haven for your excess cash. When looking at these, you will want to pay close attention to the following features:
- No monthly or maintenance fees. How much, if any, are the monthly maintenance fees and can they be waived by meeting certain conditions.
- Competitive interest rate. Not only how much is the interest rate, but when it is calculated and how often it is paid into the account. Look to see if the interest is fixed, or if it is a variable rate that could change without notice.
- Bonus interest rate. There are some accounts that will pay you bonus interest on top of the standard rate. Check the terms required in order to earn that bonus, such as withdrawal limitations and monthly deposit requirements.
- Domestic and international accessibility. Look to see how easy it is to make withdrawals from the account.
- Linked bank account with the same or different institution. With some savings accounts you will be required to have a linked transaction account to help you move your money in and out of the savings.
- Easy branch access. There are some high interest savings accounts available to Australians that operate entirely online, either incurring fees for over the counter transactions or not allowing for any at all.
- Minimum deposit requirements. You could be required to make a minimum deposit before this type of account can be opened.
Notice savers are a fairly new type of high interest savings account that does not allow for you to easily access your money once the account has been activated. You choose the amount of notice needed to give the bank for when you want to make a withdrawal, allowing you to not have to pay any penalty costs if you are unable to meet the terms. Variations in the features of a notice saver account could include:
- No account keeping fees. Check to see if you are going to be charged for the monthly maintenance of the account.
- Competitive interest rates. The standard interest rates for a notice should be competitive and are often tiered according to your balance and length of notice.
- When the interest is paid. Options are often given for when you want the interest paid into the account. In some instances this could allow for you to earn compound interest on your investment.
- Interest payments. There could be options that let your interest payments be made into another account.
- Minimum deposit amount. You will be required to make and maintain a minimum deposit with this type of high interest savings account.
- Length of notice required to give. With these accounts you are typically allowed to choose between giving a 30, 60 or 90 day notice for when you want to make your withdrawal.
- Linked account. You may need to have an everyday account with the bank in order to be able to make your deposits.
- Ability to make extra deposits. Some notice savers will allow you to make additional deposits, increasing your balance. Check to see if there is a direct credit option where a portion of your salary is automatically added to your savings with each paycheque.
A term deposit is another type of high interest savings account where you choose a length of time where you will not be making any withdrawals from your account. This type of savings product is ideal for individuals who have a certain monetary goal to meet at a future date, or for investors who want a low risk account that still yields a return on their investment. Features that you should be looking at with this type of account include:
- No monthly fees. Look out for any ongoing monthly charges for a term deposit account.
- Penalty fees or break costs. Your money is locked into a term deposit, but in some instances you may be allowed to make an early withdrawal. This will incur a penalty charge as well as adjustment in the interest rate.
- Early withdrawal notification. Many banks are now requiring that you provide them with at least 31 days notice if you are going to make an early withdrawal from the account.
- Interest rates. With a term deposit, the interest rates are typically tiered, with earnings being higher when you choose longer terms and have a higher investment deposit.
- Minimum deposit. The amount you can invest will vary, but typically the minimum deposit amount is between $1,000 and $5,000, with some banks requiring up to $10,000.
- When the interest is paid. You will likely be given options with how often you want your interest payments to be deposited into the account. In some cases, those payments will be made at maturity of the account, or into a nominated everyday banking account and you will not receive the benefit of compound interest.
- Linked account. Most banks will require that you have a separate account linked to the term deposit in order to make transfers easier.
- Account maturity. Check to see the procedure for closing the account once it has reached maturity. In some circumstances it will be rolled into a term deposit automatically if you do not provide the bank with instructions beforehand.
Cash management accounts are hybrids, giving you the benefit of earning interest on your money while still allowing you to transact like an everyday account. This type of account makes it easy to manage all of your finances from one place. Features that you should be comparing amongst different banks that offer this type of account include:
- No monthly fees. A monthly account keeping fee may be charged to you, and in some instances waived if you are able to meet the bank’s criteria.
- No transaction fees. This type of account could allow for on call withdrawals, deposits and even purchases. Check to see how much you are going to be charged for those transactions.
- Linked debit card. For easy access to your money, you might be provided with a debit card linked to the account. Check to see if it is a Visa or MasterCard, which will provide you with the ability to also make purchases wherever that logo is accepted.
- Comprehensive ATM network. If you make multiple cash withdrawals throughout the month, you will want an account that is linked to an extensive ATM network.
- Competitive interest rate. Check to see what the interest rates are, how they are calculated and paid and if there are any requirements to be met in order to earn bonus interest. With some accounts you may be required to maintain a certain monthly balance, or increase it by a certain amount month to month.
Planning your financial future should not be taken lightly. When choosing a retirement or SMSF account you will want to compare these features to make sure you are getting the best benefits for your money:
- Monthly fees. The amount, if any, of monthly fees for your account could make a difference in your savings potential.
- Interest rates. These types of accounts sometimes act as a hub for your SMSF, allowing it to earn interest while the money is in between other investments.
- Accessibility. While retirement accounts usually work similarly to a cash management account, you could find that there are limits to the number of free transactions you can make each month.
- Types of access. Look to see if there is a linked debit card, cheque writing facility, and online banking options in order to access your money.