Making Your Savings Work For You
With higher interest rates than everyday transactional accounts, and the ability to withdraw funds when needed, a savings account is a good way to grow your savings faster and reach your savings goals sooner. But, just as it’s important to research and compare home loans, it makes good financial sense to do the same when considering savings accounts. Here’s a handy guide for all you need to know about savings accounts in Australia.
What’s the difference between transactional and savings accounts?
A transactional account is used to pay for day-to-day expenses, and most people have their salary or wages paid into this type of account, while savings accounts are only used for saving money.
Savings accounts usually offer a higher interest rate than everyday transactional accounts, which means they help your money grow faster. When interest rates are rising, it makes financial sense to take advantage of higher interest rates offered with a savings account to increase your savings.
What are the benefits of a savings account?
One of the most important benefits of a savings account is the high interest rate. Because the higher the interest rate, the faster your savings will grow!
Some savings accounts offer other benefits, such as bonus interest rates for meeting conditions like regular deposits or maintaining a minimum balance. Others offer honeymoon interest rates, a higher interest rate for a short period which drops at the end of the honeymoon period.
Most savings accounts can be linked to a transactional account for convenient fund transfers and withdrawals. Some savings accounts offer a no-fee option, which means you’ll save on costs and preserve your savings
Finally, savings accounts are secure investments protected by the Australian Government’s financial claims scheme, ensuring up to $250,000 coverage in case of bank failure.
What to look for when comparing savings accounts?
When deciding on a savings account, compare accounts from different providers to find the one that’s right for you. Here are some important features to consider:
- How much is the interest rate? Interest rates differ from provider to provider so it’s worth comparing which bank offers the best rates.
- When is interest paid? While most banks calculate interest on savings each month, some may use a different calculation.
- What are the fees? Some providers off a no-fee option if you maintain a minimum balance or make regular deposits each month.
- How are withdrawals and deposits made? Can you link your savings account to your transactional account and is digital access available?
- What are the costs to withdraw or deposit funds at ATMs or inside the bank?
- What are the restrictions around minimum balance and regular deposits?
Get financial advice when you need it most
Managing your money and growing your savings doesn’t need to be complicated. Getting financial advice when needed will set you up for a secure financial future.
Talk to a mortgage broker at Lending Connections about a review of your financial situation. You’ll get expert advice that’s relevant for today’s economic climate, so you can plan ahead for things like personal savings goals, buying a home, or getting mortgage-free.
Want to know how well you save? Take this quiz to see how good your savings skills are.