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Infographic: How to choose a savings account on finder.com.au
Use your savings style as a guide for getting to your savings goal. Our infographic below shows you how to choose a Savings account that suits your savings style.
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finder.com.au featured savings accounts
|Product||Maximum Variable Rate (p.a.)||Standard Variable Rate (p.a.)|
|RaboDirect High Interest Savings Account||3.20%||2.05%|
|Australian Unity Easy Saver||3.20%||1.70%|
|ME Online Savings Account||3.10%||1.30%|
|Citibank Online Saver||3.05%||1.75%|
|St.George Maxi Saver||3.00%||1.05%|
When it comes to choosing the best savings account for your needs, you will need to assess your own savings style.
Your savings style
It comes down to how serious you are about saving. Can you regularly save a certain amount of money on a monthly basis without making any or only a few withdrawals? If yes, then you may benefit more out of a bonus saver account. These accounts award you with a bonus interest rate if you make a certain deposit and no or a few withdrawals for the month. However, if you miss out on the conditions for that particular month – not to worry, you are still eligible for the bonus interest rate for the next month.
For those who are not-so-serious or have a sporadic way of saving, then you may benefit from a introductory savings account more than the other types of accounts. An introductory savings account offers a bonus interest rate for the first couple of months of opening the account, regardless of whether you can make withdrawals or deposits. A small catch is that typically, you need to be a new customer, that is, a customer that has never held that particular account before.Guide to choosing an account suitable for your personal and financial situation.
- Savings account provide a secure place to keep your money. In return, your bank will give you interest.
- The funds are typically not as accessible as the money in your transaction account, and in some cases you could even lose interest for pulling it out, giving you an even bigger incentive to leave the cash alone until you really need it.
- Question: When deciding between a bonus saver account and an introductory savings account, which considerations should I weigh up? This depends on how often the customer needs to access the funds. Bonus savers are designed to encourage savings by rewarding customers with bonus interest as long as they meet the eligibility criteria. For introductory bonus accounts, the bonus interest rate is rewarded regardless, but only lasts for a certain number of months.
- Question: Should I lock in my savings or keep it at call? An excess number of cash accounts offering different rates for different investment turns, it may be confusing to know which one is better suited to your needs. Generally, a higher interest rate means less flexibility to access your money. Think about how often you'll need to dip into the funds – for flexibility, opt for an at-call account. For less flexibility, consider locking it in.
How does a savings account work?
Savings accounts lets you deposit money to accrue interest and building your savings. They offer a higher interest rate on the balance and limited access so that you are not tempted to make random purchases with it.
Most are linked to your transaction account, allowing you to transfer your cash back and forth. Some banks will even encourage you to save more by offering incentives such as bonus interest for not making any withdrawals. This provides an easier way for you to reach your saving goals faster if you have the discipline to consistently meet the terms.
- What constitutes as a new customer for most bank accounts and credit cards? This would depend on the individual bank or product, but in most cases you will need to have never held that particular account. Or, you could expect a time frame of at least six months to a year where you were not an existing customer in order to qualify as new.
- Why does the ATO tax me on my earned interest? Interest is considered a form of earnings, much in the same way as your salary. It is for this reason it is included as a part of your tax filing.
- How are interest rates set for savings accounts? Banks have the liberty of being able to set interest rates on their savings accounts and will take into account the expense of maintaining the account and what the other banks are offering at the same time.
With compounding interest, your interest earned is paid into the savings account periodically rather than at the end of a term. Usually monthly payments are made, allowing you to earn interest on those interest earnings the following month. Click here to learn more about how compound interest can benefit you.
Since Emily is looking for an account that awards interest with no conditions, she may want to compare introductory savings accounts. They'll award interest whether you can make deposit requirements and calculates interest on a daily basis. Typically, these accounts don't have monthly fees or have deposit requirements.
Can you get a debit card for a savings account?
Typically you don't get a linked debit card with your savings account – but there are a number of transaction accounts that offer a competitive interest rate. Most transaction account offer 0% on your balance.
I currently receive Centrelink but I can't see the amount on my bank statement. What should I do?
Take a photocopy of your bank statement to the bank, along with evidence that you currently receive a Centrelink allowance. You can then request for the bank to reissue it.
How do I find a savings account for my situation?
|Youth and student||Whether you're studying, doing an apprenticeship or under 18, there are still a range of account available for you. Every dollar counts at this stage, so check if you're eligible for a low-cost student account.|
|Saving for a goal||Setting a goal and setting up a savings plan is easier than you think. There are a few ideas that can help, including taking advantage of a sweep facility or locking it away in a term deposit. Also, take note of the interest rate and understand the features you can use.|
|Retired and seniors||Whether you love the convenience of Internet and Phone banking, or prefer face-to-face banking in a branch – financial institutions offer a range of options.|
|Accounts for children||Most parents want to help their kids manage their money responsibly and learning to save is an important skill for the future. Help your child's savings grow by choosing the right account.|
|New to Australia||Whether you've moved to Australia for work or study, Australian banks have a wide range of options for you. You'll need an everyday bank account for your everyday banking and most likely a savings account to store any surplus cash.|
Our comparison table above lets you sort the products in the order of your choosing. For example, if you're looking for savings account with the highest maximum variable rate, click on 'Maximum Variable Rate p.a.' and the table will order the products from highest to lowest.
What does high yield mean?
High yield basically refers to high return - similar to a high interest rate.
The highest interest rate also depends on your balance - savings accounts for large sums
The maximum variable rate is typically awarded up to a certain balance, so if you have a high balance, say more than $500,000 then you'll have a smaller pool of savings accounts to compare. Select the range that best describes your total balance to compare these types of accounts.
What's the difference between a headline rate and base rate?
The headline rate is the rate that bank's advertise to get your attention. While it may be relatively high, it pays to make sure what conditions are attached. The base rate is the standard variable rate and this is the true rate that you'll eventually receive. On finder.com.au, the headline rate is the maximum variable rate and the base rate is the standard variable rate.
Savers are encouraged to look beyond the headline rate. Attractive promotional rates on your savings accounts can eventually revert to the standard variable rate and is normally a significant difference – so it pays to know the conditions attached to your account and the duration of the headline rate. Moving larger sums of money into a term deposit is one way to bypass this, as term deposits offer a fixed interest rate for its duration.
How do I make the most interest?
One of the more obvious answers is to opt for a high or competitive interest rate. Since interest is typically calculated on a daily basis but paid monthly, be sure to leave as much money as you can in your account until the month has passed and the interest has been paid accordingly.
What features should I look for in a savings account?
- No or little fees. Most banks nowadays don’t charge a monthly fee for maintaining a savings account. If you’re currently paying a monthly fee, it could be a sign to switch.
- High or competitive interest rates. The interest rate on savings accounts will determine how much money your balance will earn. Look for compounded rates, where interest is deposited monthly allowing you to earn interest on that balance as well.
- Great accessibility. The level of accessibility to look for depends on your preferences and personal savings goals. While an on call savings account allows you almost instant access, term deposits and notice savers require that you plan ahead for when you are going to want to access your money.
- Bonus incentives. Some banks offer introductory incentives for new savings accounts, such as bonus interest or fee reduction.
Click on the links below to find out more.
What are the pros and cons of a savings account?
- Security. Your deposits of up to $250,000 are secured by the Australian Government (per person per institution), making a savings account a much safer place to store your money.
- Earn interest. While inside of a savings account, your money is at work earning interest each day that it stays put in the account.
- Flexibility. You have different types of savings account available to meet various needs, making it easy to find one that suits your circumstance.
- Variable rates. Standard savings accounts and notice savers typically come with a variable rate of interest, meaning that your money may not always be growing as quickly as you like. If you’d like a fixed interest rate, a term deposit may be more suitable.
- Accessibility. The ease in which you can access your savings is something that you should consider carefully. Certain types of accounts, such as term deposits, will penalise you with fees and reduced rates if you make an early withdrawal. This is not ideal if an emergency arises that necessitates you accessing your savings immediately.
Which savings account is best to park my cash for a home deposit?
This depends on when you intend to purchase your property. If you're currently looking for a property, a high interest savings account provides the flexibility of withdrawing your funds at call. However, if you don't think you'll be looking for a property very soon, then a term deposit or notice saver could be beneficial.
It provides a higher interest rate than a savings account but with less flexibility. For a term deposit, you'll be able to access your funds on a certain date, whereas you'll need to give a certain number of days notice to access the funds in your notice saver. Also, be mindful that many banks have tiered interest rates, so when you've reached around the $100,000 – $250,000 mark you may be receiving less interest. In this case, you may want to consider opening multiple accounts across multiple banks. You'll diversify your assets and take advantage of the higher rates. Click here to compare accounts where the maximum rate applies to balances over $250,000.
Is it bad to open multiple savings accounts?
Choosing the amount of savings accounts to own is a completely individual decision. Do whatever it takes to help you achieve your financial goals without it cost you in fees, interest, inconvenient minimum balance or deposit requirements. If all your needs are met with one savings account, then it's fine to stay with just one account. You may find that it's easier to have two separate savings accounts for different financial goals – this is completely fine too.
I've just come across a bonus, inheritance or tax refund – what's the best way to spend it?
- Pay of personal debt off. This includes credit cards, personal loans and making additional repayments to your home loan.
- Create or add to your emergency fund. Ideally you'd want to build enough savings to cover about 3-6 months to cover your lifestyle should you not receive income.
- Pay some towards your superfund. If you haven't retired yet, consider putting the additional funds into your super. Extra contributions can boost the balance.
- Put some into a high interest savings account. While you're choosing what to do with the money, put it into a HISA so it earns at least some interest.
The application process typically contains three parts: making sure you're eligible to apply, gathering the relevant documents and waiting for your account to be opened.
Eligibility to apply online
If you would like to apply for a savings account online, you generally need to meet the following criteria:
- You're an Australia resident for tax purposes
- You're at least 18 years old and
- You're opening the account for personal reasons.
- Q: I'm a UK citizen living in the UK. Would an Australian bank accept my application? It's a legal requirement for Australian banks to complete a identification check on all applicants who want to open an account. For that reason, it may be best to speak to a local bank in the UK that has affiliates with an Australian bank such as the Commonwealth Bank or ANZ UK.
- Q: Can I open an offshore saving bank account in Australia with no minimum deposit, zero average balance maintenance with minimum fees? This is possible, you'll find that most bank accounts in Australia don't require a minimum deposit or ongoing minimum balance. For banks that can offer offshore accounts, consider the big four: Commonwealth Bank, Westpac, ANZ and NAB.
- Q: I'm travelling to Pakistan at the end of the month and I'm not sure if my Australia issued debit card will be okay to use at the ATMs and vendors for cash withdrawals and purchases? You'll find that most Australian issue debit cards will work overseas, this is mainly because the debit cards are linked to either the MasterCard or Visa network. Before you leave, it's a good idea to check with your bank about the fees and charges that apply. A travel transaction account may be more appropriate.
The following documents will be handy to have and could speed up your application process:
- Your personal details. Such as your full name, address, phone number and email address.
- Your Tax File Number. This ensures that you get taxed right when earning interest and not at the highest marginal rate.
- Identification. A driver's licence, passport or birth certificate will do.
What are the rules around 100 point identity verification?
You may need to provide 100 points of identification in order to prove your identity when opening a bank account. While this ‘10-point check’ was once a legal requirement in Australia, this is no longer the case under the Anti-Money Laundering and Counter Terrorism Financing Act 2006.
However, many individual banks still require you to provide 100 points of ID before you can open an account. Items such as a passport or birth certificate are worth 70 points, while secondary documents such as driver’s licences are worth 40 points. If you already have an account with the same bank you will not have to satisfy the 100-point check.
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There are a few options when it comes to sending money overseas but the two most common are using your current bank account or using an international money transfer.
- Your current bank account. There are number of considerations here, like the cost of the transfer, third party fees, recipient fees and the exchange rate (though some accounts don't charge any fees for sending money overseas at all). Sending money using your current bank is usually a safer option as banks have a number of security features in place. However, in return for this security, your international transfer may be more expensive.
- International money transfers. This is when you use a third party to handle the international transfer for you. You may find that they charge cheaper fees with better exchange rates, due to the nature of their business model. Some transfer services also specialise in transfer to a particular country.
Can I deposit a foreign or overseas cheque?
Most banks will let you deposit an overseas cheque into your Australian transaction account, but there may be fees involved. Typically a processing fee is charged and it could take up to a month for the cheque to be processed. Check your Product Disclosure Statement or get in touch with your financial institution to enquire about what fees could apply to you.
It's actually recommended that you bring a mix of travel money when your travel, so you're not just limiting yourself to just one account. One advantage with a travel card is that you can lock in your exchange rates before you leave – whereas a credit card is very helpful for emergencies and large purchases. See our travel money section for more information about your options when going overseas.
What about buying a house overseas?
If you're buying a house abroad you may be thinking about exchange rates, what account you could open and where. For international money transfer options, see the information here. You'll need an account both here in Australia and account in the country that you're purchasing the property with. Whether it's an offset account or transaction account, that's up to you – but it may be a good idea to speak to a financial planner or mortgage broker about your options first.
The interest rates overseas are a lot higher, can I invest overseas?
The general answer is yes for well-developed economies. Well-developed countries have regulated financial industries that could provide more security for your money, compared to a country that doesn't. They also have well-established banks that can facilitate account for non-residents. There are a number of considerations, such as the exchange rate and tax implications. Remember, if your local country's interest rate isn't doing so well but another country's is, it's likely that there will be a significant in the currency exchange. In Australia, if you invest overseas, you're also accountable to pay tax on any profits you make.
Can I use OFX to exchange from AUS to a foreign currency, to deposit in an Australian based foreign currency account?
Yes you can OFX to this, you'll need to nominate your foreign currency account as the recipient account and keep an eye out for how much you actually get deposited into your account. There may be a lot of third party fees involved. For more information on OFX international money transfers, see this page.
Does PayPal charge international fees?
PayPal is a platform that facilitates transfers and generally does not charge fees. It's actually your bank that is charging the fees, rather than PayPal. For example, if you're in Australia buying a product that is being sold in AUD, then generally there are no fees. However, if you're purchasing an item denoted in USD then you'll most likely be charged the currency conversion fee by your bank. There are ways around this, take a look at travel transaction accounts to find out more.
|Transaction account||High interest savings account||Term deposit|
Using the table above, the most appropriate options for Ozzie would be a high interest savings account, or a term deposit with a short maturity period.
Are there are any risks with a savings account?
Ensuring that the savings account you choose is compatible with the way you manage your finances is critical if you want the most benefit. Consider the following when choosing a savings account to ensure that it will fit your lifestyle:
- Inflexible terms. If there are certain requirements that must be met in order to receive a competitive interest rate you should first consider if you are going to be able to meet those consistently.
- Choosing the right account type. If you are a casual saver who is saving for a rainy day, then an on call account may be the best choice for you. However, if your savings are meant for a future goal, you should be considering investing them in a term deposit where you get a higher rate of interest, and incentive not to dip into the funds.
What happens to unclaimed funds in a bank account?
The Australian Government currently has a rule where accounts that have been dormant for 3 years can be closed by the financial institution. If this has happened to you, see our guide to claiming your money.
- Pay yourself first. Set up a deposit from your pay that goes directly into an external account, like a Christmas saver account. This way, your savings and spending money are separated.
- Set savings goals. Having more savings could mean a better lifestyle, helping you take control on your financial future.
- Implement a budget. This will help you manage your expenses and income. Review on an annual basis to make sure it's still meeting your needs.
- Understand the benefits of compound interest. The more you have in your account, the quicker your interest grows.
- Take advantage of features. Including the offset account linked to your home loan or the sweep facility on your transaction account.
Budgeting and financial planning
There's a lot more to budgeting than it meets the eye: apart from diverting a portion of your money into a savings account and not relying on your credit card too much there are few goals you should be considering:
- Your holiday. Though it is a luxury, it doesn't mean you can't fit it into your financial habits. If you prepare for big expenses like this, they are less likely to be a financial burden later. Rather than using debt to finance a holiday, use your savings.
- Being financially independent. The thought of not worrying about money – ever – may feel unachievable, but with the right steps, you'll be a lot further ahead than others. Budget to get rid of debt and increase your assets, whether it's in shares or a savings account.
- Emergencies and the unexpected. Some unexpected events can be positive: a relative has a baby, your best friend is getting married or your buying a pet. All these exciting things, as well as the not-so-exciting can cut into your savings. Pay attention to your budget and your rainy day fund to ensure that you can meet these unexpected costs, so they don't add on your debt.
What’s the best thing to do with my savings?
People tend to spend their savings to help them reach their personal or financial goals. This could be your dream holiday or car, or a deposit for your home loan.
How can I not stress about money?
Money is important – but did you know that nearly half of adults between the age of 25 and 45 think dealing with money is stressful? There are a few reasons why: we're never taught how to handle money at school, it's not often talked about and we're forced to make choices daily about it. Here are some tips to help you not stress about money:
- Prioritise your needs. Most things we buy have a zero, long term impact. For example, for how much longer are you going to keep that smartphone before the next version is released? Aim for bigger things such as buying a home, not having any debt or travelling.
- Talk about money often. Problems with money don't just go away – the more you bring it us, the more likely you'll be able to understand and deal with your financial situation.
- Protect your assets. This includes regularly depositing money into your superfund, or protecting your assets with insurance.
- Seek financial advice. If you're interested in building your wealth with a sizeable deposit, you may want to consider speaking to a financial planner to discuss your options.
What are your top savings tips for September 2016?
Whatever your goals is for September 2016, you'll need to come with a savings strategy. Here are our few tips:
- Quick your bad habits. If you've been looking for an excuse to cut down on alcohol, quit smoking or go on that caffeine detox, this could be it. Cutting down on those small costs regularly eventually accumulate to big savings.
- Know where your spending your money. If your goal is to save for something big, tracking where you're spending the money so you know what your limit is every month. Apps like Pocketbook, or even banking platforms like Netbank can let you know how much you're spending in each area.
- One week off, one week on. Try staying home for one weekend and then going out for the other. This strategy works out well for families as the kids don't mind taking a break off their regular lifestyle – but only for a week.
- BYO. Bring your own wine if possible when you go out for dinner, bring your own lunch to work.
If you would like free financial counselling you can call the Financial Counsellors hotl
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How is the interest paid?
Rates are displayed for the terms and minimum deposit sizes listed in the table above. The rate you receive could vary depending on your deposit size and interest payment frequency.
finder.com.au is an 100% free comparison and information service that helps Aussies find the right account for their needs. We compare a wide range of accounts where you can read our reviews to help you determine if the product is right for you. We also provide helpful tools, tips and guides to help you quickly compare the market's leading transaction accounts, high interest savings accounts and term deposits.