You never know when you’ll have a need for your savings, which is what makes a term deposit a difficult account for some Australians to consider. A 90-day saver account can provide you with the same higher interest earnings, but also allows you to take the money out after giving the bank 90 days notice of your intent. This feature provides a happy balance between a high interest savings account and term deposit.
How does a 90-day notice saver work?
When you open a notice saver account, you will be asked at what terms you want based off of three options. You could choose to give 31, 60, or 90 days' notice for when you want to withdraw your funds. Generally the 90 days notice is the longest duration possible, and is also the one that typically has the highest interest rate.
It’s important to think about the duration of 90 days and it’s impact on your cash flows. 3 months is a fairly long time to be waiting for a cash flow, so you’ll need understand your budget well in advance to fully benefit from a notice saver.
How do I compare three-month notice savers?
There are distinct features to a 90-day notice saver account that makes it stand out from other savings products:
- Interest rate. Australians who want to see a high return on their savings should look carefully at the interest rate being offered for the 90 day notice saver and compare it with others as well as those being offered by term deposits.
- Interest calculation. You can see a higher return on a notice saver if the interest earned is being paid into the account monthly. In this way you will be earning interest on interest that you have already earned.
- Deposit amount. You will need to ensure that you can meet an minimum deposit requirement set forth by the bank.
- Minimum balance. Some accounts may require that you maintain a minimum balance in order to earn interest at the higher rate.
- Adding funds. A stand out feature of the 90 day notice saver is your ability to add money to the account at will.
Any pros and cons?
- Better savings opportunity. Notice savers allow you to add to your balance whenever you want, with some even giving the option of automatic deposits from your transaction account. This is very beneficial for the Australian who needs a little encouragement to save.
- Competitive interest rates. In comparison to an on call account, the interest rate for the notice saver 90 days will be higher.
- No fees. There are no fees for this savings product, and no penalty when you give notice that you are ready to withdraw your savings.
- 90 day notice. Although you decide when to withdraw your savings, this is not an account which will be helpful in the event of an emergency where you need to access your money immediately.
- Variable rate. You are not locked into an interest rate with notice savers, so if they were to drop you would see a difference in your monthly interest payments.
What are the risks?
With any high interest savings account, you need to choose the type that best suits your purpose. Not considering the terms and your future needs could cost you money over the life of the account. Avoid the following if you want to maximise your savings with a notice savers 90 days account:
- Investing for too long. If you will not be needing to withdraw the funds for a number of years, then the higher interest rate offered by long term term deposits would give you a better return on the investment.
- Not paying attention to the interest rate. This is a variable interest rate account, meaning that the rates could go down during your investment. If left at a lower rate for too long you will see a significant loss in your interest earning potential.
Ask an Expert