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Bank Accounts Where You Can't Withdraw

Take an in-depth look at savings accounts where your money is locked away -and find out with Savvy which of these accounts is the best.

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, updated on September 11th, 2023       

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Bank accounts which lock your savings away explained

Savings accounts where you can’t withdraw your money without losing interest are an ideal way to motivate yourself to be disciplined and save money.  Compare locked savings accounts with term deposits and bonus saver accounts right here with Savvy to see what each type of account offers to keen savers.  We compare financial products to make choosing the best account easier for you.

How do bank accounts where you can't withdraw work?

Bank accounts which limit access to your savings are known as locked bank accounts, also called closed accounts.  Although you aren’t physically prevented from removing your funds, you’ll lose substantial interest or be penalised if you do. 

Other types of savings accounts have withdrawal limits per month to encourage you to leave your savings alone.  Such accounts can be valuable for those who find saving hard or who lack the discipline to let their savings grow.  Savvy can help you find the best savings bank account by providing clear and precise information to help you compare accounts and find one that fits your banking needs.

What different types of conditional savings accounts are there?

Term deposits

A term deposit is one you make for a set period in return for a higher interest rate.  The longer you leave your savings with the bank, the higher the interest rate you may be offered up to a set limit.  You can’t withdraw your funds during your term deposit period (except in very exceptional circumstances and often with at least one month’s notice). The term of your deposit can vary from one month up to several years, with a tiered increasing interest rate depending on how long you leave your savings alone. 

Restricted withdrawal savings accounts

These accounts give you a set interest rate on the condition that you make at least one deposit per month into the account and no withdrawals.  For every month you meet this ‘no withdrawal’ condition, you receive the stated interest.  If you do make a withdrawal, though, you won’t earn interest for that month, so there’s a strong incentive to leave your savings alone and watch them grow.

Bonus interest saver accounts

These accounts offer a basic interest rate and a bonus rate if certain conditions are met.  If you do meet these conditions, which may involve depositing a certain sum per month or maintaining a minimum amount in your account, you can be awarded the bonus interest.  If you don’t meet the conditions, though, you only receive the basic interest rate, which can be as low as 0.02% p.a.  This is the ‘carrot on a stick’ method to encourage you to save your money and grow your balance month by month.

Others offer a set interest rate if conditions are met involving other linked accounts.  These conditions may require you to make a certain number of purchases with a linked credit or debit card or make a set number of transactions in your linked transaction account.  For example, you may have to make five credit card purchases a month or ten transactions a month in your linked transaction account in order to earn the advertised interest rate.

How do I choose between the different types of savings accounts?

  1. Decide how much money you want to lock away to gain interest for you. Think about how long you’re prepared to lock your money away for and how likely you are to need to gain access to your funds at short notice
  2. Consider whether you’re able to abide by conditions which may be imposed in return for a higher interest rate. Are you prepared to open a linked everyday account?  Do you want to be locked into making a set number of transactions or depositing a set amount per month?
  3. Use Savvy’s free comparison service to compare the same type of account side by side. For example, if you’re comparing term deposits, compare three-month term deposits side by side so you can get a clear idea of which institution offers you the best deal
  4. When you’ve decided which savings or locked account is the best for you, click on the ‘open account’ button and begin the process of setting up your new account

More frequently asked questions about locked savings accounts

What if I need to access my funds in an emergency?

There are emergency provisions which will allow you to access the money you’ve locked away in a term deposit.  These are known as ‘hardship provisions’.  You’ll need to apply in writing to your bank explaining the hardship you are suffering if you wish to withdraw your funds. This will cause you to lose any bonus interest offered.

Do all banks offer term deposits for the same length of time?

No – not all banks offer term deposits for all periods, so it’s well worth using Savvy to compare different banks and financial institutions to find one that offers the term you’re after.  The most common term periods are one month, three months, six months and 12 months, after which you’ll be able to choose from yearly increments typically up to five years.  

How often is interest paid back into my account?

Interest can be paid monthly, quarterly or annually, depending on the type of account you choose.  The more frequently you are paid interest, the faster your savings will grow, as you’ll end up earning interest on your interest, which is a process known as compounding. 

Do banks pay loyalty bonuses for re-investing?

Yes – some banks offer additional bonus interest in the form of a loyalty bonus if you roll your term deposit over when the initial deposit period has finished.  For example, if you take out a six-month term deposit and then decide to invest your money for another six months with the same bank, you may be eligible for a bonus interest rate on the second six-month term.

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