All About Online Savings Accounts
When internet banking arrived in Australia it changed the banking industry in a number of ways.
One of the new products that were made possible by the arrival of internet banking was the online savings account.
What is an Online Savings Account?
An online savings account is generally considered to be one where you can only transact on the account electronically rather than being able to visit a branch.
Internet banking can be used for transferring funds in and out of the account, as well as for paying bills via Bpay. The accounts can also receive electronic transfers such as wages, and in most cases regular direct debits to other accounts can be established.
Most online savings accounts can also be accessed and transacted on via telephone banking.
When it comes to withdrawing cash, some online accounts give you the ability to withdraw funds from an ATM, however many require that you electronically transfer the funds to a standard transaction account first.
Generally online savings accounts pay a higher interest rate when compared to a standard bank account. This is due to the lower costs involved in an online account, where there is no branch support required.
The main benefit of an online savings account is the higher level of interest that is generally paid.
One of the indirect benefits of an online savings account actually comes from one of the restrictions.
Some online accounts require that you transfer money into a standard transaction account before it can be used, meaning that you cannot withdraw money from an ATM or pay via EFTPOS.
This can help in avoiding impulse purchases, as you have to go through the process of logging into your internet banking and transferring funds to another account before you can complete a purchase. For savers lacking a little discipline this can actually be a good thing.
Traditionally it has only been the big banks and credit unions who could offer savings accounts, as they were the only ones with the branch networks to support their customers.
With the arrival of internet banking and online savings accounts, it has become possible for new entrants to come into the Australian market and offer competitive savings accounts.
Due to the fact that many of these new entrants don’t have expensive branch networks to maintain, they can actually offer better deals in some cases than the major banks.
Choosing an Online Savings Account
For most Australians, choosing an online savings account will simply come down to which company can offer the highest interest rate.
This is certainly a good place to start, however you also need to consider the ongoing fees that may apply to the account. Many online accounts have no ongoing fees, but it’s still something to look out for.
Access and support is also an important factor to consider. Are you happy dealing with a call centre, potentially based overseas, or do you prefer to visit a branch if you need help with your account? Not all providers offer branch support, or even have branches for that matter.
An online savings account can be a great way to boost your savings, and by choosing wisely you can speed up your journey towards your savings goals.