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Locked savings accounts
Locked savings accounts that you can't withdraw from can help you grow your savings balance. A locked savings account could include a term deposit or a savings account with restrictions on withdrawals.
An account you can't withdraw from could help you save money, as you're restricted from making impulse purchases. Your options include a term deposit or a savings account with withdrawal restrictions. Here's the difference:
Savings account with withdrawal restrictions. Also called a bonus saver account, these offer extra interest each month you save money and make no withdrawals. You can access the money if you really need to, but it means you'll give up your interest that month, so it would certainly make you think twice before making any impulse purchases.
Term deposit. This is a type of savings account that locks your money away for a certain period of time, from one month to five years, while earning a fixed interest rate. It's more restrictive than a high interest savings account, as you typically need to give 31 days notice to make a withdrawal and you'll likely lose all your interest.
Check out a range of locked savings accounts accounts that you can't touch below.
Savings accounts are packed with features to help you save money and grow your balance. They offer high interest rates, charge minimal or no fees and typically include a range of incentives to encourage you not to touch the money in your account. These are also called bonus saver accounts. Bonus savers offer a higher interest rate each month you make limited or no withdrawals and when you make regular deposits, providing a great incentive to keep your money in the account and to keep adding to it.
In order to activate this bonus interest rate each month you will need to satisfy certain requirements, which may include:
Depositing a specific minimum amount into your account each month.
Making a minimum number of deposits each month.
Making no or limited withdrawals each month.
Maintaining a minimum account balance.
Opening a linked transaction account and using it to perform a specific number of transactions each month.
Finder survey: How long are Australians holding term deposits?
Response
I am not planning to get a term deposit
61.37%
12 months
16.26%
6 months
6.29%
24 months
4.31%
9 months
3.77%
3 months
3.5%
60 months
1.98%
36 months
1.26%
48 months
1.26%
Source: Finder survey by Pure Profile of 1113 Australians, December 2023
What happens when I withdraw from my savings account?
If you don't meet the conditions of the savings account, for example if you don't deposit any money into the account for a month, you'll earn a lower interest rate on your balance for that month, which could be as low as 0.01% p.a. By scheduling an automatic transfer from your salary into your savings account each month, you can quickly build a sizable savings balance. Our savings calculator will help you work out just how much interest you can earn.
How to compare bonus saver accounts you can't touch
Make sure to compare the following when researching the benefits of bonus saver accounts:
Research the maximum interest rate you can earn on each account. Remember that you will only earn this high rate if you satisfy all the account terms and conditions each month, so check out the base interest rate that will apply if you miss a deposit or make too many withdrawals.
Check if there are deposit requirements. Is there a minimum amount you need to deposit each month in order to receive the best rate? Also check to see whether there is a minimum deposit required to open an account.
Check if there are limits on the number of withdrawals you can make. Many accounts will limit the number of withdrawals you can make each month and this limit could possibly be as low as zero. If you fail to meet this requirement, you won’t earn any bonus interest for that month.
Linked account requirements. Some banks will require you to also open a linked transaction account with them in order to open a bonus saver account. If this is the case, make sure the transaction account is suited to your needs and doesn’t have any hidden fees.
Check for any hidden account fees. Exorbitant bank fees can quickly defeat the purpose of any bonus interest earned on an account, so read the fine print to make sure you’re aware of any ongoing fees, withdrawal fees and other transaction charges.
How accessible is your cash? Check to see whether your account can only be managed online or whether you also have branch, mobile banking and phone banking access. Easy accessibility to customer service and support is another important factor.
Term deposits you can't withdraw from
A term deposit is another type of savings account that you can't withdraw from. Term deposits are more restricting than savings accounts, as you need to lock your money away for a certain length of time and can't access it at all until the term is finished. If you do need to make a withdrawal, you'll need to give 31 days' notice and pay a penalty. You can choose to lock your money away in a term deposit for one month up to five whole years at a time and the term deposit will pay a fixed rate of interest for the length of the term.
There are a couple of key benefits to term deposits. First, you get the security of a fixed interest rate and a guaranteed return on your investment. If interest rates drop while your money is locked away in a term deposit, you won’t be affected.
Second, these accounts are set up in a way to discourage you from dipping into your savings balance. You typically can’t access the funds in a term deposit without having to give 31 days' notice and paying a sizable fee, so any money you deposit is safe from the risk of impulse-buying and unnecessary spending.
On the other side of the coin, term deposits are not all that convenient if you ever need fast access to your funds in an emergency and you also won’t be able to benefit from any interest rate rises that occur until your deposit matures.
How to compare term deposits you can't touch
Consider the following features when comparing the pros and cons of term deposit accounts:
The fixed interest rate. As the table above shows, interest rates can vary greatly between banks and depending on the term you choose. Look around for the best interest rate you can find – but make sure there are no unexpected fees attached.
When interest is calculated. Check to see whether interest is calculated on the account daily, monthly, quarterly or yearly. The more often interest is calculated, the more your balance will grow as you'll earn interest on your interest.
Compare the terms and conditions. When comparing accounts, make sure you evaluate the features of accounts with the same term length. For example, only compare six month term deposits with other six month term deposits. If your bank doesn’t offer the term you want, look elsewhere.
Check the fees for early withdrawal. It’s worth checking what sort of fee you will incur if you need to withdraw your money before the term ends.
Check where interest is paid on maturity. Is the interest you earn paid back into the same account or into a different account? Do you need to open a linked account with the same financial institution to receive interest payments?
Are there loyalty bonuses? If you want to re-invest your money into another term deposit after your first deposit matures, will you be rewarded for your loyalty with a bonus interest rate?
I want a locked savings account, should I get a bonus saver or a term deposit?
Term deposits and bonus saver accounts can both offer many benefits to people who struggle to save money. Make sure you research the benefits and drawbacks of both types of accounts before deciding if either one is right for you.
The main differnce between the two types of accounts is that a bonus saver offers extra interest as an incentive to leave your money in the account, but there's nothing really stopping you from withdrawing. On the other hard, a term deposit requires 31 days notice to withdraw, so it's a lot harder to touch. If you're really bad with impulsive purchases, a term deposit will be harder to access.
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Karen Eley is the founder of Women Talking Finance, which provides money coaching and financial literacy and education services. An experienced and former financial adviser who has worked in financial services industry for 22 years, Karen is a Certified Money Coach (CMC), holds a Bachelor of Accounting and an Advanced Diploma in Financial Planning and CFP.
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To make sure you get accurate and helpful information, this guide has been reviewed by Karen Eley, a member of Finder's Editorial Review Board.
Alison Banney is the money editorial manager at Finder. She covers all areas of personal finance, and her areas of expertise are superannuation, banking and saving. She has written about finance for 10 years, having previously worked at Westpac and written for several other major banks and super funds. See full bio
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Alison has written 652 Finder guides across topics including:
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You pay nothing. Finder is free to use. And you pay the same as going direct. No markups, no hidden fees. Guaranteed.
You save time. We spend 100s of hours researching bank accounts so you can sort the gold from the junk faster.
You compare more. Our comparison tools bring you more banking products from across the market.
