The features to look out for when choosing a savings account.
"An investment in knowledge pays the best interest” Benjamin Franklin said.
Saving money can be easy and rewardable when you follow the tips below,designed to help you choose the right savings account.
A competitive interest rate
Every extra point of interest makes a big difference. With the cash rate in Australia at historic lows, you should try and seek out the savings account with the best interest rate. Keep in mind that some of the advertisements you see on TV or the radio advertise introductory or bonus rates. Bonus rates have certain conditions that you must meet, such as no withdrawals in the month.
Little to no fees
A good savings account should have few or no fees. There are plenty of banks that offer savings accounts that don’t have fees attached. Some banks try and charge maintenance, service and monthly fees. Below are a few examples of fees banks may charge you:
- Monthly account.
- Branch deposit.
- ATM withdrawal.
It’s accessible 24/7
Check to see if the bank you’re with offers an easy-to-access savings account. Having branches and ATMs available throughout Australia with convenience to you should be a factor when considering the best savings account for you. Having access to your account 24/7 online, or over the phone is also another important factor to keep in mind.
No withdrawal limits
Some banks put restrictions on the amount of money you’re able to withdraw. There is a reason for this: this is supposed to be a savings account, not a transaction account. If you’re withdrawing money frequently, a transaction account will help you out. If your bank has withdrawal limits, find another bank because there are plenty of savings accounts provided by banks that don’t have withdrawal limits.
Beware of the bonus trap
When opening a savings account, watch out for the bonus interest rates. These rates are very competitive but only last for a certain time or if you meet the conditions of the account. There’s nothing wrong with opening a bonus savings account but make sure that when the bonus interest runs out, that you still have a competitive interest rate.
Are fixed rate accounts a good idea?
Some savings accounts, usually known as fixed rate bonds or term deposits, have a set interest rate for a period of time. These accounts tend to have a fixed period from 7 days all to way to 5 years. Term deposits tend to have higher interest rates that help you reach your savings goals faster. You do get peace of mind since the interest rate will not change. The rate will not decrease, but it won’t increase either. Choose a fixed rate account if it suits your savings goals. If you aim to save for a short period of time a fixed rate account is one of your choice.
These are the best tips to educate yourself for choosing a savings account that will reach your goals.
Do you currently hold one of Australia's top savings accounts?
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