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Minimum deposit requirements

How do minimum deposit requirements work on savings accounts, transaction accounts and term deposits? Read on to find out.

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When you’re comparing and choosing bank accounts, one of the important factors you need to consider is whether each account has any minimum deposit requirements. These requirements can apply to savings, transaction and term deposit accounts, and can affect everything from the interest rate on your account to whether you have to pay a monthly fee.

However, minimum deposit requirements vary from one bank to the next and on the type of account you choose, so it’s essential to read the fine print regarding deposits before choosing a bank account.

What are minimum deposit requirements?

A minimum deposit requirement is the minimum amount you are required to deposit into a bank account. These requirements usually take one of two forms:

  • A one-off minimum deposit required to open an account
  • An ongoing minimum deposit, usually monthly, required to maintain an account

These deposit requirements can apply to savings, transaction, and term deposit accounts, but their implications differ depending on the type of account you open.

Minimum deposit requirements for savings accounts

There are two types of minimum deposit limits that apply to savings accounts: a minimum deposit required to open an account and an ongoing minimum deposit required in order to earn the maximum interest rate on your balance.

Savings accounts with minimum opening deposits

If a savings account has a minimum opening deposit, you'll need to deposit the minimum amount specified (or more) in order to open an account. If you can't transfer sufficient funds to open an account, the bank will deny your new account application. For example, the ANZ Premium Cash Management Account has a minimum opening balance of $10,000.

On other savings accounts, the minimum opening deposit may be a nominal amount. For example, the Bank of Queensland Bonus Interest Savings Account has a minimum opening deposit of just $0.

Savings accounts with ongoing minimum deposit requirements

If you open a bonus saver account, there's a good chance you will need to meet monthly deposit requirements if you wish to earn the maximum interest rate on your savings balance. Also known as reward saver accounts, these types of accounts pay bonus interest if you meet specific terms and conditions. One of the most common conditions is that you must deposit a minimum amount each month.

This is usually accompanied by a requirement that you do not make any withdrawals from your account if you want to earn the highest possible interest rate. If you do not meet the deposit and/or withdrawal requirements in any given month, you will not receive any bonus interest and instead only get the base variable rate.

For example, the ING Savings Maximiser offers a maximum variable rate of 1.35% p.a. when you link with an ING Orange Everyday Account and deposit at least $1,000 each month and make 5+ card purchases a month. In months when you don't meet the minimum deposit condition, the lower standard variable rate of 0.05% p.a. applies.

Minimum deposit requirements for transaction accounts

When minimum deposit requirements apply to a transaction account, they usually have a bearing on the monthly service fee attached to the account. Many banks offer to waive the monthly account-keeping fee on your everyday transaction account if you deposit more than a specified minimum amount each month.

This means that if you regularly deposit funds into your transaction account, for example if the account receives your weekly or fortnightly paycheque, you may be able to avoid monthly fees. However, if you fail to meet this requirement in any given month, the fee will automatically be deducted from your balance.

For example, CommBank waives the $4 fee on a Smart Access Account whenever you deposit $2,000 per month, while Westpac waives the $5 monthly service fee on its Choice Transaction Account when you deposit $2,000 each month.

Minimum deposit requirements for term deposits

If you want the security of guaranteed returns that only a term deposit can provide, it’s important to be aware that you will need to satisfy the minimum deposit amount in order to open an account. Sometimes referred to as the initial investment amount, this specifies the minimum amount of funds required to open a term deposit.

For example, the minimum deposit for a St.George term deposit is $1,000, while you need to invest at least $5,000 if you want to set up a term deposit with Firstmac.

It’s also worth pointing out that interest rates on term deposits usually vary depending on your deposit amount. So while there may be a minimum deposit of $1,000 required to open an account, a higher minimum deposit (for example $5,000) may be required if you want to achieve a higher interest rate tier.

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How to choose the right account

Regardless of what type of bank account you’re looking for, make sure you’re aware of any minimum deposit requirements that apply before you open an account. Deposit requirements can have a huge impact on your finances and determine the interest-earning power of your savings account as well as the ongoing cost of your transaction account. In some cases, particularly for term deposits, they can even determine your eligibility to open an account.

With this in mind, be sure to read the terms and conditions concerning any minimum deposit requirements connected to a bank account. Consider these restrictions along with the other features and fees of a range of accounts before making the final decision about the right product for you.

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