locked-savings-accounts

Compare locked savings accounts

Information verified correct on December 3rd, 2016

From locking in your interest rate to a lock on withdrawals, a “locked” savings account has multiple meanings.

Savings accounts come in a variety of different forms and with an array of features designed to help you build your savings balance as quickly as possible. If you ever hear someone refer to a “locked” savings account, this could mean one of a couple of things.

On the one hand, this could refer to locking in a fixed interest rate for a set period of time, such as you would do with a term deposit. On the other hand, this could refer to a savings account that “locks” away your money, restricting your opportunities to withdraw any funds from your account.

Both options can provide advantages to serious savers, so let’s take a closer look at how you could benefit from a locked savings account.

Compare locked savings accounts below

Rates last updated December 3rd, 2016
$
3 Mths p.a. 4 Mths p.a. 6 Mths p.a. 12 Mths p.a. 24 Mths p.a. 36 Mths p.a. 48 Mths p.a. 60 Mths p.a. Min Deposit Interest Earned
Bankwest Online Term Deposit
Bankwest Online Term Deposit
2.30% 2.50% 2.70% 2.70% 2.60% 2.60% 2.65% 2.65% $1,000 Open More
St.George Term Deposit
St.George Term Deposit
2.20% 2.00% 2.30% 2.60% 3.10% 3.20% 2.80% 2.95% $1,000 Open More
Bank of Melbourne Term Deposit
Bank of Melbourne Term Deposit
2.20% 2.00% 2.30% 2.60% 3.10% 3.20% 2.80% 2.95% $1,000 Open More
BankSA Term Deposit
BankSA Term Deposit
2.20% 2.00% 2.30% 2.60% 3.10% 3.20% 2.80% 2.95% $1,000 Open More
Citibank Term Deposit ($75,000)
Citibank Term Deposit ($75,000)
2.50% 2.50% 2.95% 2.35% 2.35% 2.35% 2.35% 2.35% $75,000 Open More
Westpac Term Deposit
Westpac Term Deposit
2.10% 2.00% 2.20% 2.50% 3.00% 3.10% 2.70% 2.85% $5,000 Open More
ING DIRECT Term Deposit
ING DIRECT Term Deposit
2.10% 2.60% 2.10% 3.00% 2.70% - - - $10,000 Open More

Locking in your interest rate

One of the most common locked savings accounts is a term deposit. These accounts not only allow you to fix an interest rate for a predetermined period but they also lock away your money in an account where you can’t access it.

The fixed interest rate on term deposits means you can enjoy consistent investment returns along with the security of knowing that your rate won’t fluctuate in line with the RBA’s official cash rate or your bank’s standard variable rate. But it also means that it’s very difficult to access the money in your account, helping you to grow your savings balance rather than constantly dip into your funds.

What are the pros and cons of term deposits?

The pros

  • Fixed rate. When you invest money in a term deposit, the interest rate is locked in until the end of the term. This means you won’t be affected by any interest rate falls.
  • Competitive rates. Term deposit accounts allow you to earn a competitive rate of interest on your savings balance. Compare term deposit interest rates at finder.com.au today.
  • No dipping. You can’t access your money when it is locked away in a term deposit, so your savings balance doesn’t get chipped away by everyday spending.
  • Choice of terms. There’s a wide range of terms available from Australian banks, typically ranging from a few months up to five years.
  • Safe. Term deposits are generally considered to be a risk-free investment option.

The cons

  • Rates could rise. If interest rates rise, the fixed rate that applies to your term deposit remains the same.
  • Inflexible. It’s extremely difficult to access funds held in a term deposit, which can be very restricting if an emergency expense arises.

How to choose a term deposit and lock in a competitive rate

There are several factors you will need to consider before deciding on the right term deposit account, including:

  • The interest rate. Interest rates vary depending on the term you choose, so shop around for the provider that offers the best rate for your desired investment term.
  • The term. Terms range from a few months to five years, so consider your savings goals and future financial commitments before choosing a term.
  • The minimum investment amount. Some banks will impose a minimum limit on the amount you can deposit in your account, for example $1,000.
  • How often interest is paid. Some accounts will pay interest monthly, half-yearly or yearly, while others will only pay interest at maturity. The more often interest is paid, the better it will be for your balance thanks to the effects of compound interest.
  • What happens when the deposit matures. Will your funds automatically roll over into a new term deposit when the first deposit matures, or will they be paid into a linked account?

Locking away your money

A locked savings account can also be hugely beneficial to people who struggle to save money. If you’re the type of person who constantly dips into your savings, opening a savings account you can’t withdraw from could be the solution to your money problems.

There are three types of accounts that allow you to lock away your money: term deposits, bonus saver accounts and notice saver accounts. We examined the benefits of term deposits above in terms of locking in an interest rate, but these accounts also have the advantage of letting you lock away your money. Unless you’re willing to incur sizable fees, you typically can’t access the funds in a term deposit account until the deposit matures. This is a real bonus for savers who are always dipping into their account and eating away at their savings balance.

Compare bonus savers below

Rates last updated December 3rd, 2016
$
$
months
Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees Min Bal / Min Deposit Interest Earned
ME Online Savings Account
Ongoing, variable 3.05% 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.
3.05% 1.30% 1.75% $0 $0 / $0 Open More
ING DIRECT Savings Maximiser
Ongoing, variable 2.75% p.a. when you link to an ING Orange Everyday bank account and deposit $1,000+ each month. Available on balances up to $100,000.
2.75% 1.60% 1.15% $0 $0 / $0 Open More
RaboDirect High Interest Savings Account
Introductory rate of 3.20% p.a. for 4 months, reverting to a rate of 2.05% p.a. Available on balances below $250,000.
3.20% 2.05% 1.15% $0 $0 / $0 Open More
ANZ Progress Saver
Ongoing, variable 1.91% p.a. when you link to any Australian everyday bank account and deposit $10+ each month. Available on the entire balance.
1.91% 0.01% 1.90% $0 $10 / $10 Open More
Westpac Reward Saver
Ongoing, variable 1.85% p.a. when you deposit at least $50 and make no withdrawals each month. Available on the entire balance.
1.85% 0.01% 1.84% $0 $0 / $0 Open More
Bank of Melbourne Incentive Saver
Ongoing, variable 1.85% p.a. when you make at least one deposit and no withdrawals each month. Available on the entire balance.
1.85% 0.01% 1.84% $0 $1 / $1 Open More
Australian Unity Easy Saver
Introductory rate of 2.90% p.a. for 4 months, reverting to a rate of 1.70% p.a. Available on balances below $250,000.
2.90% 1.70% 1.20% $0 $0 / $0 Open More
BankSA Incentive Saver Account
Ongoing, variable 1.85% p.a. when you make at least one deposit each month and no withdrawals. Available on the entire balance.
1.85% 0.01% 1.84% $0 $0 / $0 Open More
AMP Cash Manager
Ongoing, variable 1.50% p.a. when you link to an AMP Visa debit card and deposit $2,000+ each month. Available on the entire balance.
1.50% 1.50% 0.00% $5 $0 / $0 Open More
HSBC Flexi Saver Account
Ongoing, variable 2.00% p.a. when you link to any Australian bank account and deposit $300+ each month (other conditions apply). Available on balances up to $5,000,000.
2.00% 1.50% 0.50% $0 $0 / $0 Open More
Bankwest Hero Saver
Ongoing, variable 2.65% p.a. rate when you deposit at least $200 each month and make no withdrawals. Available on balances up to $5,000,000.
2.65% 0.01% 2.64% $0 $0 / $0 Open More

Bonus saver accounts get their name because they allow you to earn bonus interest on top of the standard variable rate. However, in order to earn that bonus interest, you’ll need to satisfy specific terms and conditions each month – and one common condition is that you don’t make any withdrawals. So by locking away your money and not making any withdrawals, you can earn a higher interest rate and build your balance quicker.

Finally, notice saver accounts offer high interest rates and are actually quite similar to term deposits. However, instead of choosing how long you will invest your money for, you choose how much notice you will need to give your bank before they will agree to release your funds – 31, 60 and 90 days are the most common time periods. Notice saver accounts allow you to lock away your money and earn a higher rate of interest than you would earn on an ordinary savings account that provides easy access to your money.

What are the pros and cons of locked savings accounts that don’t allow withdrawals?

The pros

  • Higher interest rates. In return for not being able to easily access your money, these types of savings accounts typically offer high interest rates, allowing you to grow your balance as quickly as possible.
  • You can’t dip into your savings. If you regularly give in to temptation and dip into your savings, opening a savings account you can’t withdraw from is a great way to protect your nest egg.
  • Save your money, don’t spend it. Whether you choose a term deposit, a notice saver account or a bonus saver account, these products are specially designed to encourage you to save money and discourage you from spending it.

The cons

  • Can’t access money in an emergency. If an unexpected bill arrives and you need access to money as quickly as possible, this type of account can be a major inconvenience.
  • Penalties apply. You will be penalised if you break the withdrawal rules that apply to your account, either with a lower interest rate or perhaps a fee.

How to choose a locked savings account that doesn’t allow withdrawals and lock away your money

Before you can choose one of these locked savings accounts, it’s important to consider your financial needs and savings goals. For example, if you want to be able to access your funds in an emergency, a bonus saver could be a good choice as you will only forfeit your right to earn bonus interest for the month you exceed the account’s withdrawal limit. If the speed with which you can access your money isn’t a major factor, a term deposit or notice saver could be more suitable.

Once you know what type of account you want, start comparing the features of individual products. What interest rate applies to the account? Are there any ongoing fees to worry about? Can you easily manage your funds through Internet and mobile banking?

By answering these questions and comparing multiple accounts, you’ll be able to find the locked savings account that has everything you need to achieve your financial goals.

The latest in banking

Tim Falk

A freelance writer with a passion for the written word, Tim loves helping Australians find the right home loans and savings accounts. When he's not chained to a computer, Tim can usually be found exploring the great outdoors.

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Savings Account Offers

Learn about our information service
ME Online Savings Account

Maximum Variable Rate

3.05%

Standard Variable Rate

1.30
ING DIRECT Savings Maximiser

Maximum Variable Rate

2.75%

Standard Variable Rate

1.60
Bankwest Hero Saver

Maximum Variable Rate

2.65%

Standard Variable Rate

0.01
RaboDirect High Interest Savings Account

Maximum Variable Rate

3.20%

Standard Variable Rate

2.05

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