What is a pensioner bank account?
Pensioner bank 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 interest rates or level of service for Australian seniors. They're similar to regular bank accounts, but you can only open one if you're receiving a pension.
If you're not receiving a pension, take a look at an everyday bank account instead.
How does a pensioner savings account work?
A pensioner savings account works almost the same way as your typical savings account offered by an Australian bank. You deposit money into the account and earn interest on your balance. However, one of the key differences with pensioner savings accounts is that many will offer interest while also allowing for unlimited access to the money with a debit card and bill pay. Regular savings account usually don't come with as easy access to the money. This makes it easier to manage savings and everyday spending from one convenient account if you're a pensioner.
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 0.50% p.a., however this can go up to 1% or higher depending on how large your balance is.
Who can open a pensioner account?
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 government pension, such as the Age Pension. This pension usually needs to be a government pension from Centrelink or the Department of Veterans' Affairs Not every account has these requirements so it’s important to check.
How do I find the best pensioner account?
Every person's circumstances are different, which means there's no one size fits all account. While comparing the different accounts available, look at the following features:
- No fees. You don’t want to be losing money to monthly fees. Look for an account with no monthly account keeping fee.
- Competitive rates. If you're looking at pensioner accounts that pay interest, check to make sure the rates being offered for your balance are competitive with other similar accounts.
- Accessibility. Many pensioner 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. You can also use any Big Four bank ATM for free in Australia.
- 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 savings account ensure that it comes with a debit card.
What are the pros and cons of using a pensioner savings account?
- Flexibility. Pensioner savings accounts are structured to make it easier on seniors and those on a pension to take care of their financial needs from the one place.
- No fees. Banks typically do not charge fees for the use of a pensioner 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.
- Less choice. Not all banks offer a pensioner bank account, so you might find you'd rather open a standard bank account with your current bank instead.
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