Let’s not beat around the bush. The COVID-19 pandemic has had a devastating impact on the economy and it’s negatively affected the financial positions of hundreds of thousands of Australians.
Perhaps one shining light though is that it’s also encouraged (and necessitated) a lot of us to have a good hard look at our finances, including our savings.
So why would you be thinking about a savings account right now? There are many reasons:
- To temporarily stash money that was invested elsewhere before the crisis
- To save towards a post-COVID goal like a wedding or holiday
- To build up an emergency fund to get through these hard times
- Maybe you’ve already got a savings account, but you want to ensure it’s still up to scratch
- Perhaps you’ve never had a savings account, but you’re now motivated to open one.
Whatever your motivation, there are some real benefits to keeping your money in a savings account, especially in this COVID-19 climate:
1. The safety element: If you keep your money in a savings account with an Australian ADI (Authorised Deposit-taking Institution) it’s actually guaranteed to the tune of $250,000 per person, per ADI under the Government’s financial claims scheme. Are banks likely to go bust? Probably not, but you might still like having that peace of mind.
2. Your money will earn money: While savings account interest rates aren’t fixed like a term deposit, you’ll be able to earn interest and watch your savings grow. Providing you meet the criteria, that is.
3. They’re still flexible: Unlike term deposits and some other investments, accessing your money in a savings account doesn’t require you to jump through hoops. So if you really need it, it’s there.
That said, not all savings accounts are alike. In fact, there are a few features you may want to ensure your account has before introducing it to your hard-earned savings.
A great interest rate
A savings account without a decent interest rate is like a pizza without the toppings: underwhelming. After all, you want your money to be working for you, right?
While savings account interest rates aren’t as strong as they have been in previous years, there’s a considerable spread between the rates offered by different banks which could have a big impact on the interest you earn.
At present, the average ongoing savings account rate in the Mozo database is 0.75%, so if putting your money into an account with a decent rate is a priority, you’ll certainly want to be looking for a rate higher than that.
After all, using the Mozo savings calculator shows that on a savings balance of $10,000, an account with an interest rate of 1.75% would earn $532 more in interest than one with a rate of 0.75%.
But to give you a bit of perspective, here are some of the highest interest rates currently (at the time of publishing) in our database for different types of savings accounts.
- Macquarie Savings Account - 2.65% intro rate for the first four months
- AMP Saver Account - 2.26% intro rate for the first six months
- Rabobank High Interest Savings Account - 2.25% intro rate for first four months
Ongoing bonus rates
- BOQ Fast Tracker Saver Account - 2.00% maximum ongoing bonus rate
- 86 400 Save Account - 1.85% maximum ongoing bonus rate
- MyState Bank Bonus Saver Account - 1.85% maximum ongoing bonus rate
- Up Saver Account - 1.85% maximum ongoing bonus rate
- Volt Bank Savings Account - 1.65% unconditional ongoing rate
- MyLife MyFinance MySavings Account - 1.50% unconditional ongoing rate
- Southern Cross Credit Union Star Saver - 1.50% unconditional ongoing rate
It’s important to remember that different savings accounts have different requirements that may or may not suit your needs (more on that below though). So check out the linked reviews for the savings accounts above for more information, or read our guide for a run through of different types of savings accounts.
As mentioned above, introductory and ongoing bonus savings accounts generally require you to tick off a few requirements before you can get the maximum interest rate. That’s why finding an account with (realistically) achievable conditions is going to be an important feature to making sure your savings balance grows.
So ask yourself:
Can I meet a monthly deposit requirement? Depositing $1,000 a month might be no problem if you’ve got a regular salary coming in at the moment, but if not it may be worth looking at accounts with lower deposit requirements.
Can I meet the minimum number of transactions? Alternatively, some accounts require that you make a minimum number of transactions or taps (typically five) with a linked debit card each month.
Are you happy with not touching your savings? Some accounts come with a condition that you can’t make withdrawals from the account without voiding the maximum rate. So, if you need access to your funds from time to time this probably won’t suit.
If you think you won’t be able to meet these requirements, then a base rate or ‘unconditional’ savings account without any hoops to jump through might be the way to go.
Helpful extra tools
Having access to a great rate is one thing, the other is actively putting money into your account. After all, the aim for many Australians right now is to build up a savings buffer to help them down the track, or to start putting money away for a post-COVID goal.
Establishing a savings routine by making regular transfers - for example, each fortnight or month when you get paid - is often touted as the best way to keep your balance growing. But some accounts also come with handy extra features to keep it ticking up as well.
Round ups are a simple way of keeping your savings growing, and they’re currently available with savings accounts from the likes of Bank Australia, Beyond Bank, ING and Up. You’ll be able to set an amount (e.g. $1 or $5) that gets rounded up into your savings account every time you make a purchase with a linked card. For example, a $3.50 coffee purchase would automatically be rounded up to $4 with difference (50 cents) deposited into your savings.
Multiple accounts and savings jars
If you have multiple goals to focus on or just want to segment your savings, being able to use savings ‘jars’ or multiple accounts will be key. While plenty of banks let you open multiple savings accounts, only one account will usually be able to earn the maximum rate on offer. That’s not the case for neobanks like 86 400 and Up, as well as UBank, which all apply the same bonus rate across multiple accounts as long as conditions are met.
Hate watching your cash sit in a transaction account instead of earning interest? You could keep most of your money in your savings account and manually transfer it to your transaction account when needed. However, UBank’s sweep technology has actually automated the process, allowing users to set minimum and maximum limits to ensure there’s always a desired amount of money in both accounts.
Ready to find a new savings account to help grow your money during COVID-19? Get started with some of the hot offers in the table below, or for even more offers and the latest rates, head over to the Mozo savings account comparison hub.
Compare savings accounts - last updated November 28, 2020
- MyState BankMyState Bank
Bonus Saver Account
- Bank of QueenslandBank of Queensland
Fast Track Starter Account
- Bank of QueenslandBank of Queensland
Fast Track Saver Account
^See information about the Mozo Experts Choice Savings Accounts Awards
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