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Pensioner savings accounts are specially designed to meet the needs of Australians over the age of 55 or receiving a government pension, like the Age Pension. However, not all accounts offer the same high interest rates or level of service.
If you’re over the age of 55 or in retirement, this guide can help you to compare savings accounts, transaction accounts and term deposits so that you maximise your savings balance.
How does a pensioner savings account work?
A high interest pensioner savings account works almost the same way as your typical savings account offered by an Australian bank. One of the key differences is that many will have combined accounts, offering interest payments on the balance while allowing for unlimited access with a debit card and bill pay. This makes it easier to manage savings and everyday spending from one convenient account.
Pensioner accounts also normally have a tiered interest rate structure. So the more money in your account, the higher your interest rate will be. For example, if you have less than $50,000 in your account, your interest may be 1% p.a., however this can go up to 2% depending on which account you have.
To qualify for a pensioner account you need to satisfy certain criteria which can vary depending on which account you’re applying for. In most cases, you need to be at least 55 years of age, in your retirement stage or be registered for a pension. Not every account has these requirements so it’s important to check.
How do I find the best pensioner savings account?
Every person's circumstances are different, which means there's no one size fits all account. Before you open a seniors account, it's important to check what features it offers that will best help your money to grow throughout your retirement years. While comparing the different accounts available, look closely at the following features:
- No fees. You don’t want to be losing retirement money to monthly fees. Look for high interest savings accounts that do not accrue extra charges.
- Competitive rates. Check to make sure the rates being offered for your balance are competitive with other similar accounts.
- Accessibility. Many pensioner high interest savings accounts are tied together with your transaction account, giving you easy access through the use of a debit card. You may also be able to set up for direct deposits into the account and debits to pay for your monthly expenses.
- Available ATMs. If you will be making cash withdrawals, look at the bank’s ATM network to ensure that you will always be able to find one close by.
- Cheque facility. If you are still conducting transactions using bank issued cheques, look for an account that allows for this free of charge.
- Debit card. If you also want to be able to make purchases directly from your pensioner high interest savings account ensure that the debit card has a credit card logo.
What are the pros and cons of using a pensioner savings account?
- Flexibility. High interest pensioner savings accounts are structured to make it easier on seniors to take care of their financial needs from the one place.
- Fees. Banks typically do not charge fees for the use of a pensioner high interest savings account.
- Deeming. With the new regulations now in effect, pensioners will be showing a lower income rate from their high interest savings accounts.
- Bonus interest. Due to the nature of these accounts, earning bonus interest on balances is rarely an option.
- Terms. If you were to choose a term deposit as a part of your pension savings plan, you would be restricted in when you could withdraw the funds.
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