Interest rates
The higher your interest rate, the more you’ll earn on the money you’ve stashed away. A savings account will have a much higher rate than a standard transaction account, although these can vary between financial institutions. For example, if you deposited $500 each month for ten years at a rate of 2% p.a., you’d earn $6,360 in interest, which is almost $1,700 more than if you opened the same account with a 1.5% rate.
You'll also reap the rewards of compound interest, which means interest is calculated on both your savings and the interest you’ve already accumulated. You can use Savvy’s handy compound interest calculator to work out how much you could earn. Comparing savings deals allows you to find the best rate on offer and maximise the amount of interest you earn on the money you’ve put away.
Fees and charges
Opening a savings account can come at a cost. While some financial institutions will proudly be ‘fee-free’, others have a range of charges including:
- Account keeping fees (typically from $0 to $5)
- Paper statement fees (typically around $2.50)
- Online transfer fees (up to $3)
- Excessive withdrawal fees cost (up to $3)
Financial institutions can waive fees if you meet certain account benchmarks, such as not breaching your withdrawal limit. Choose an account which offers fewer fees and higher interest to avoid your savings goals being counterproductive.
Linked accounts
A linking account attached to your online saver account is one of the main ways people access their money these days. Your wage will be paid into your savings account so you can transfer what you need for regular expenses into your transacting account. The financial institution you bank with won’t always require you to have a linked transaction account with them, but some do, so it’s worth considering these when comparing.
Withdrawals
Even though savings accounts are designed to sit and accrue interest, you may have to make withdrawals from time to time. Institutions usually have limits on how many free transactions you can make, after which you could be charged a fee of about $3 each time you withdraw money. Some accounts are harder to withdraw from, such as term deposits. You’ll need to give 31 days’ notice before you can withdraw and you may have to forfeit interest for that month. Locked accounts also offer you extra interest for not making withdrawals, but strip it away if you do access your funds.
Regular deposits
Some institutions waive fees if you make monthly deposits above a certain amount to keep growing your bank balance. For example, a bank may not charge its monthly account fee if you deposit more than $2,000 within a given month. By comparing savings accounts with Savvy, you can find one with deposit requirements you can easily manage to ensure you get the most out of the account.
Balance requirements
Some accounts make earning the top interest rate conditional on having a minimum monthly balance. For instance, some institutions offer competitive rates if you have at least $5,000 in your account. Many institutions cap the maximum balance on your account at $5,000,000, but some also have no balance requirements. You’ll find it easier to choose an account that works for you with Savvy’s side-by-side savings account comparison.
Other features
Check to see if your institution offers a range of added extras with your account, including internet and phone banking and round up functions. The latter is sometimes offered on linked transaction accounts. Every time you make a purchase from your linked everyday account, the price is rounded up to the nearest dollar and the difference deposited into your savings account.
