The Ins & Outs of Savings Account Features
It’s time to start shopping for a savings account so your hard-earned dollars can start growing! However, with hundreds of savings accounts on the market, this can be a daunting experience. To make the process easier and a little less stressful Mozo has created this guide, highlighting the features you should consider when choosing a savings account.
That way you can immediately rule out some accounts and move others to the maybe pile. Always keep in mind, the account offering the highest interest rate may not necessarily be the best option for you and your savings needs!
Top 10 Savings Account Features
1. Interest Rates
The way in which your savings will grow is with a competitive interest rate. The higher the rate, the quicker you’ll earn more and more pennies. With a savings account the financial institution offers a standard variable interest rate per annum. So be sure to take the time and find a savings account with an impressive interest rate. Even a 0.5% difference in interest can make you hundreds of dollars in the long run. Throw some figures in the Mozo Savings Calculator for an idea of how much interest you can receive on your savings.
2. Bonus Incentives
If there’s a savings account featuring a bonus interest rate then by all means take a further look! A bonus rate is offered on top of the base rate when a specific criteria is met. It often requires you to make a minimum deposit per month along with a limited number of withdrawals. For example, with the ANZ Progress Saver account you can earn a bonus 1.81%* special rate when you make a minimum deposit of $10 and no withdrawals in the month. Always remember to check the terms and conditions as the bonus rate may only apply for a limited time before a new bonus promotion is introduced. There is no point choosing a savings account for the bonus incentives if you don’t believe you’ll be able to meet the criteria.
3. Promotional Interest Rate
As you start your search for a new savings account you’ll come across plenty of banks enticing you to sign up with them. A lot of banks in Australia offer an impressive promotional interest rate to new account holders. This rate is usually only for a limited time before reverting to the standard variable interest rate of the account. For example, to kick start your savings in a RaboDirect High Interest Savings Account you can earn a bonus rate of 3.05%* for the first four months from the account opening. Regardless of how high the promotional rate is be sure to check what the standard rate is. There’s no point signing up for a high interest rate for only three months then having it drop to an uncompetitive low. To learn more, head over to our guide on types of savings account.
4. Minimum Opening Deposit
Some financial institutions require you to make a minimum deposit before they open and activate your savings account. This is usually to cover costs associated with setting up the new account and then maintaining it. Having to make a minimum opening deposit may deter you from that savings account.
5. Monthly Deposit Requirements
This feature comes hand in hand with a lot of savings accounts. In order to lap up the high interest rate on offer you are required to maintain a minimum monthly balance or deposit a certain amount every month. If you fail to meet the requirements the bank will lower your interest rate or pay no interest for that month. So, it's a good idea to work out how much you can save each month and then look for a bank that offers bonus rates for fulfilling this criteria. It’s also a good idea to set up an automatic deposit into the account. Use the savings calculator to see exactly how much you can save and make in interest over a year.
6. Frequency of Withdrawals
Keep your hands of those savings, that’s the reason they’re sitting in a savings account isn’t it?! A lot of accounts have a limit on the number of withdrawals you can make a month. In order to secure a bonus rate you may not even be able to make a withdrawal in a month. Once you’ve thrown some figures in the savings goal calculator you’ll have more of an idea of your budget and if you feel you may need to dip into your savings frequently. If you believe you might need to make frequent withdrawals then choose an account that allows you to do so without penalties.
7. ATM Facility
Many online savings accounts don’t come with a hole in the wall facility where you can withdrawal money from your savings account. So if you need to access your savings you’ll need to transfer the money into your linked transaction account in order to withdraw it - which, keep in mind, takes time. If you’re likely to withdrawal money regularly from your savings account, find an account that features ATM facilities.
8. Linked Accounts
With most online savings accounts you'll need to have a linked transaction account so that you can transfer money to and from the savings account. Sometimes this account needs to be with the same bank (and sometimes you can link to any bank account). If the account requires a same bank transaction account be sure to check for fees and features of this account as well as the savings account to ensure you will not end up paying extra fees.
9. Automatic Salary Deposits
If you’re a little forgetful and unreliable when it comes to savings then look for an account that offers direct crediting. This means that a portion of your salary can be automatically deposited into your savings account from your employer each month.
10. Account Keeping Fees
We deliver you positive news, there are plenty of savings accounts out there with no account fees (online savings accounts)! Who wants to be paying bank fees when you’re trying to save? However, in saying this some banks may slip a few fees your way. Be wary of the following:
- ATM withdrawal fee
- Monthly account fee
- Branch deposit fee
- Over the counter transaction fee
How to help your savings grow
- Making savings transfers automatic – set up an automated plan where money is transferred from your transaction account into your savings account every month. Even if it’s as little as $20!
- Take the time to find a savings account free of fees, this means more money in your pocket
- Shop around and compare savings accounts to find a high interest rate
- Avoid making unnecessary withdrawals from your savings account as you’ll be penalised and will miss out on a bonus rate
- Do up a budget and try and stick to it!
- Review your rates every six months - you never know, there could be a better deal waiting for you around the corner with a much higher interest rate.
Feel like your current savings account doesn't have the features that best suit you? Then compare savings accounts on Mozo to find out which plan will help save you the most.
*Correct as of 25th of January, 2018, rates may vary.