We compare physical savings accounts to online savings accounts.
If you want to build a savings balance to put together a deposit for a home, pay for a holiday or just offer extra protection for the future, a high-interest online savings account can be a powerful tool. With the ability to earn a high rate of interest on your savings balance, these accounts also typically feature minimal fees and can be conveniently managed online. The end result of all these benefits is a quick and easy way for you to help your money grow.
But have you ever wondered whether an online savings account is any different to a regular savings account with your bank? Does an online savings account really offer a better deal? To answer this question, let’s take a closer look at the savings account offerings from some of the major banks.
See your savings account compares to the market below
CommBank offers the NetBank Saver, its specialist online savings account, as a product that can be linked to your CommBank transaction account and offer easy access to your money. Let’s compare its rates and fees with those of the bank’s standard savings account, the GoalSaver, which branch, phone and online access.
|Account access||Online, phone||In branch, online and phone|
|Maximum interest rate||2.55% p.a. (for three-month introductory period)After first three months: 1.00% p.a.||2.50% p.a. , 0.01% p.a. if conditions aren’t met|
|Conditions needed to receive maximum interest rate||Balances of between $1 and $5 million||Balances up to and including $100,000Must deposit at least $200 per month and make no more than one withdrawal per month|
As the table shows, comparing savings accounts can be quite confusing. While the online option (NetBank Saver) offers the higher maximum interest rate, this is only available for an introductory period of three months. After that time, the rate reverts to CommBank’s standard variable rate on savings accounts, which at the time of writing was 1.00% p.a.
This figure is significantly lower than the ongoing rate of interest (2.50% p.a. p.a.) you can achieve with the GoalSaver account. However, you’ll need to deposit at least $200 per month and not make any more than one withdrawal from your account each month – if you breach these conditions, you’ll only earn a paltry 0.01% p.a. interest for that month.
|Online Saver||Progress Saver|
|Account access||Online, phone||In branch, online and phone|
|Maximum interest rate||1.81% p.a.. or 0.01% p.a. if conditions aren’t met|
|Conditions needed to receive maximum interest rate||No minimum balance||Must deposit at least $10 or more per monthMust not make any withdrawalsMust not have any fees or charges processed to the account|
As the table shows, ANZ’s savings accounts tell a similar story to those from CommBank. While the online account offers a higher maximum rate, it is only available for an introductory period. The Progress Saver account allows you to access a better ongoing rate after the first three months, but you’ll need to make sure you satisfy the necessary terms and conditions to avoid your interest getting cut to just 0.01% p.a.
Other online savings accounts
It’s worth pointing out that the online savings accounts from Australia’s ‘big four’ banks represent only a small portion of the online savings accounts available to Australian consumers. Banks, credit unions and building societies across the country offer a huge range of account options to new and existing customers, so it’s definitely worth comparing a selection of online savings accounts across providers. The table below shows the details of some other popular online savings accounts.
|ING Savings Maximiser||Bankwest Hero Saver||Citibank Online Saver||ME Bank Online Savings Account||HSBC Serious Saver|
|Account access||Online, phone||Online, phone||Online, phone||Online, phone||Online, phone|
|Maximum interest rate||2.80% p.a.(standard rate of 1.35% p.a.)||2.60% p.a.(standard rate of 0.01% p.a.)||2.85% p.a.(standard rate of 1.70% p.a.)||2.95% p.a.(standard rate of 1.30% p.a.)||2.95% p.a.(standard rate of 1.30% p.a.)|
|Conditions needed to receive maximum interest rate||Must link to an ING Orange Everyday bank account and deposit at least $1,000 each month. Available on balances of up to $100,000||Must deposit at least $200 each month and not make any withdrawals. Available on balances of up to $250,000||2.85% p.a. applies for introductory four-month period, after which the account reverts to standard rate of 1.70% p.a. Available on balances of less than $500,000||Must link to an ME Everyday Transaction Account. Must make a Tap&Go purchase each week with your debit Mastercard. Available on balances of up to $250,000||2.95% p.a. applies for introductory four-month period, after which the account reverts to standard rate of 1.30% p.a. Available on balances of up to $1 million|
The above table shows that you can access significantly higher interest rates if you’re willing to shop around. However, in many cases you’ll need to make sure that you satisfy all the terms and conditions necessary to receive the maximum interest rate.
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What are the benefits of online savings accounts?
Higher interest rates
With an online savings account, you can receive a much higher interest rate than you would on an everyday transaction account. Many financial institutions also offer bonus or promotional interest rates to help you grow your balance even faster.
Online savings accounts only charge minimal fees, with many even offering zero ongoing fees to customers.
Easy account management
It’s easy and convenient to manage your online savings account balance whenever and wherever you wish.
Regular savings plan
You can set up a regular deposit from your pay into your online savings account.
Easy to compare
Using a financial comparison website like finder.com.au, you can quickly and easily compare online savings accounts and find the account that offers the best deal for you.