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 – sometimes similar to term  deposit accounts. The major catch is that you can’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 –  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  their Savings Maximiser product in 2000. ING Direct does not have branches –  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

It’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 – 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.

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