Tips To Picking The Right Savings Account

By Author: adampol
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Over recent years, many Australians have concentrated on reducing their debt rather than trying to increase their savings. However, with the economic situation beginning to improve, people are once again starting to consider saving once again. With such a wide choice of products on offer it can be difficult to choose the right account for your needs.

Here are our top seven tips to picking the right online savings account.

Beware Of High Introductory Bonuses

Many online savings accounts that appear in ‘best buy' tables are newly launched accounts. Many such accounts get into ‘best buy' tables by offering high introductory bonuses. For example, you may benefit from a higher interest rate for a six or twelve month period.

If the terms of these accounts suit you, take advantage of them. However, make sure that you keep a note of when the introductory bonus ends. You'll need to compare the accounts on offer once again to check you're still getting the best deal.

Regular Saving

If you have spare cash to invest every month it may be worth considering ...
... a regular monthly online savings account.

Some accounts offering high rates do insist that you set up an automatic savings plan (sometimes of $100 per month or more) to the new account. Some accounts offer high rates of interest to regular savers, although you will often be prohibited from making a withdrawal for a certain time period (often one year).

How To Transact

There are many different types of savings accounts including branch-based and online accounts.

When choosing the most appropriate account, make sure that you select one that allows you access to your money in the way you need it. If you need to be able to go into your local branch to make a deposit or withdrawal, an online account may not be the best option for you.

Fixed or Variable?

Savings providers generally provide a choice of fixed or variable interest rates. Fixed interest rates are normally called ‘term deposits' and require you to commit your savings to them for a set period of time; often one, two or five years.

Whilst these accounts will ensure you always know what return you are receiving on your savings, you should only consider one if you are certain that you will not need to access the funds during the entire fixed rate period. Some term deposits will not allow withdrawals during the term, whereas others may have significant penalties for early withdrawal.

Variable rate accounts can fluctuate in terms of the rate of interest that you will receive but you will generally have more flexibility and more access to the funds.

Consider Linked Accounts

Some banks and building societies will offer you enhanced savings rates or facilities on their online accounts if you have other financial products with them. For example, if your current account is with a particular provider, they might offer you higher interest rates for your online savings.

Consider both your own bank, and also moving your current account to another provider to take advantage of these preferential online savings rates.

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