High-Interest Savings Accounts: Could you get a better deal?
Now is a great time to start a savings plan and make your money work harder for you. Recent competition from new Internet-only savings specialists and non-bank savings accounts has meant that the big banks have been forced to rethink their standard low or no-interest transaction accounts and start offering better deals for customers who want to save.
High interest savings accounts, including Internet-only savings accounts, cash management accounts (CMAs) and bonus interest on traditional savings accounts mean you could be doing much more with your money than leaving it in a regular everyday transaction account.
Online Savings Accounts
Internet-only savings accounts are a relatively new addition to the Australian banking sector. Many offer "fee-free banking" and higher interest rates â€“ sometimes similar to term deposit accounts. The major catch is that you canâ€™t access your money via branches, automated teller machines (ATMs) or EFTPOS; you can generally only transfer the money to another bank account via telephone or Internet banking.
For people who struggle to plan their finances, however, this could actually be an incentive â€“ having one extra step between your ATM card and your money means that more planning is needed for expenditure, perhaps reducing an inclination to eat into your savings.
ING Direct was one of the first institutions to offer an Internet only savings account, launching theirÂ Savings Maximiser product in 2000. ING Direct does not have branches â€“ you can only access your money via telephone or Internet banking, or more recently though a Post Office. The "Savings Maximiser" is still a competitive option amongst the current online savings accounts, with the promise of "no fees, ever", no minimum deposit or balance and an attractive interest rate. To access funds via ATM, EFTPOS or through a branch, you must first transfer funds from your Savings Maximiser account to your regular transaction account, a process that can take up to two days. If your Savings Maximiser is linked to an ING Orange Everyday account, then transferring money between the accounts is usually very quick.
More traditional banks, such as the Commonwealth Bank and NAB, now provide Internet savings accounts that can be accessed along with regular transaction accounts via one Internet banking login. These accounts are sometimes called "all in one" accounts.
One feature to look out for with an online savings account is an automatic savings plan that will withdraw a set amount at regular intervals, making it even easier to save.
Cash Management Accounts
Cash management accounts (CMAs) offer a higher rate of interest for larger account balances, while still giving you easy access to your money. The catch is CMAs often have a large minimum opening balance and tiered interest rates that reduce significantly for smaller balances.
Savings and transaction accounts
Savings accounts generally have a higher rate of interest than everyday transaction accounts. Some also feature "bonus" interest rates if, for example, no transactions are made in a given month. Like cash management accounts, the interest rate is often tiered, increasing as your balance increases.
Look at your options
Itâ€™s worth investigating high-interest savings accounts. Even if you only have a small amount of money to save from your pay packet each week, an additional savings account can help separate your savings and keep you on track with your savings plan â€“ and, with lots of high-interest, no-fee options about, now is a great time to find a better deal and watch those savings grow.