With lending institutions in Australia competing for the consumer dollar, there are many different types of savings accounts offered. The choice of account mainly depends on the personal circumstances of the depositor. Therefore, researching the various types of accounts available should be undertaken as a part of establishing a savings plan.
These are some of the basic accounts that are offered. There could be slight variations to these by the banks or other institutions to create a point of differentiation.
Limited Access Accounts
These are accounts where funds can only be accessed via the internet or by automated telephone banking. However, they are ideally suited for those who live in outback areas and do not have easy access to a bank. Features and benefits include:
- No monthly service fee
- High interest, calculated daily, paid monthly
- No minimum balance
- No minimum transfers
- No fixed investment terms
- Same day access to funds online or automated telephone banking
Accounts with a Bonus for Non-withdrawals
This type of account is useful when saving for a special goal within a limited time frame. The special feature of this account is the payment of a bonus interest rate, above the base rate, each month in which the following conditions are met:
- Deposit a specified minimum each month, and
- No withdrawals in that month.
This account, whilst it may help to accelerate the rate of saving, it is also very restricting in terms of access to the funds.
High Balance Savings Accounts
For those customers who are able to maintain a high balance in their savings accounts, banks may offer additional incentives such as:
- No monthly service fees
- Tiered interest rates on balances with higher balances rewarded with higher interest rates
- No restrictions on withdrawals
These accounts are ideal for securing savings for a set period. Features and benefits of term deposits may include:
- No monthly service fee or establishment fee
- High fixed interest rate on specified minimum balances. The higher the balance, the higher the interest rate paid.
- Fixed investment terms. The term can vary from one month to several years.
- Interest paid monthly, annually or at maturity. Again, the interest rate is slightly higher if paid at maturity than if paid monthly.
For example, a Term Deposit of $5,000 for 5 years with interest paid at maturity will be paid a much higher interest rate than a term deposit of $5,000 for 2 years with interest paid monthly.
With the variety of savings accounts being offered by the banks and other institutions choosing one to suit an individual’s specific circumstances and requirements is not difficult. It just needs some due diligence.