Whether you are saving money for the short or the long term, choosing between a savings account or a term deposit can be a difficult decision. Should you lock away your money for a fixed term at a fixed rate so that you can’t touch your money or should you opt for a savings account which allows you to top up your balance as you save but gives you easy access to your cash.
Well, now Australians have a new savings option. RaboDirect has just launched Australia’s first notice savings account. The Notice Saver is part savings account, part term deposit. It has no fees, a variable interest rate tiered depending on your balance and chosen notice period, and there is no fixed investment period. You can also make additional deposits at anytime. How the Notice Saver account differs from a regular online savings account is that in order to make a withdrawal from the account you have to give notice, either 31, 60 or 90 days before you can access the funds.
How RaboDirect Notice Saver rates compare.
For balances of up to $250,000, here’s a look at how the Notice Saver compares to the highest term deposit and at call savings account rates in the Mozo database at the time of writing.
|Notice Saver||Term Deposit||Savings Account|
|31 Day||4.45%||4.15% Heritage Bank Term Deposit||5.10% ME Bank Online Savings account (12 month bonus rate, then 3.50%)|
|60 Day||4.55%||4.40% The Rock Building Society & Firstmac Term Deposit||5.10% ME Bank Online Savings account (12 month bonus rate, then 3.50%)|
|90 Days||4.65%||4.51% UBank Term Deposit||5.10% ME Bank Online Savings account (12 month bonus rate, then 3.50%)|
Stop the savings seesaw
While savings accounts still have the highest return, having easy access to your money often means that your savings seesaw throughout the year. According to research from RaboDirect, over 80% of Australians admit to making an impulse buy in the past 6 months, with over 52% spending $250 or more.
The appeal of the notice savings account is in its ability to help you meet your savings goals. The notice period requirement removes the temptation of withdrawing cash on a whim but offers the flexibility that traditional term deposits lack such as being able to add funds at any time and a variable interest rate.
RaboDirect have definitely identified a gap in the savings market and it will be interesting in the coming months to see whether other banks follow suit with notice savings accounts of their own.