I have long-term savings goals. What kind of savings account do I use?

Did you know that if your savings are in an every day savings account instead of a high interest savings account, you could be missing out on a lot of extra savings?

When people think about earning interest on their savings, they tend to think of term deposits. But if you don’t want to lock your money away for a certain period of time, a high interest savings account is a good option.

With interest rates rising, now is a good time to open a high interest savings account. The current highest interest rate on the Mozo database is 5.75% p.a. (for the first 4 months) and there are other savings accounts offering 5.5% ongoing.

With a 5.75% interest rate, you could be earning an extra $57.50 per month on a savings balance of $10,000 which is much better than just letting your savings sit in a normal savings account not earning interest.

What is a high interest savings account?

Generally, high interest savings accounts work like your usual savings account. However, there are usually conditions that have to be met every month before you can earn the highest interest rate on offer.

These bonus rates often come with requirements such as depositing a certain amount per month or making a certain amount of transactions on a linked credit or debit card.

While this may seem like a lot of effort, the bonus interest you will be earning on your savings is well worth it.

Should you opt for a term deposit or a high interest savings account? 

Both are good options for earning extra interest on your savings but one option may work better for you, depending on your individual circumstances.

Term deposits

If you know you won’t be needing to access your savings for a while, a term deposit is a good option. With most term deposits, there are various time periods you can choose from. From 3 months, 6 months, 12 months, 18 months, all the way up to 5 years so you can choose a time frame that works for you.

Just be aware that the interest rates for shorter term deposits are usually much lower than for term deposits of a year or more, so it may only be worth opening a term deposit if you know you won’t need to access your money for over a year.

It is also worth noting that with most term deposits, you will not be able to withdraw your money before the term deposit matures without losing any extra interest you would have made on your money. You also can’t add any extra savings to the term deposit. 

Here’s a look at some of the term deposit rates available now.

High interest savings accounts:

If you want to keep your savings growing while also being able to access it at any time, then a high interest savings account is probably a more suitable option.

Just make sure that you read and understand any conditions that have to be met every month to ensure you get the maximum interest rate!

Here’s a look at some of the high interest savings account rates available now.