High Interest Savings Accounts

In recent times Australians have become more astute about getting the best return for their dollar with savings accounts. This has caused the major banking groups to increase their offers, in an attempt to stop the steady decrease of customers, and to try and attract new ones. With so many consumers now able to search the Internet to compare deals offering extremely competitive rates and reduced or no fees, this puts the onus on the banking institutions to come up with enticing deals for high interest savings accounts.

Featured High Interest Savings Account

UBank have hit the market with force! Enjoy one of the highest promo rates on the market with the UBank USaver. Get the security knowing that your money is with Australias biggest banks.

• Variable Rate of 6.51% p.a.
• Reverts back to Standard Variable Rate of 6.01% p.a.
• Monthly account keeping fees: FREE

Click here to read the UBank USaver terms and conditions

Traditionally the average Australian would have a transaction account, and a savings account, and here and there some term deposits or investments. But in the last few years with economic crises and failures of what were previously reputable savings institutions, people have become more aware of what’s actually happening to their money, or not happening as the case may be. It is not unusual, even today to find some people still have money sitting in a basic transaction account paying virtually nothing in interest. Let’s have a look at the type of accounts available and how high interest savings accounts might benefit you:

Different types of accounts

Savings Account	Account Details	Variable Rate p.a.	Base Rate p.a.	Intro Rate p.a.	Fees	Min Balance/Min Deposit
Virgin Savings Account	The Virgin Online Saver Account	6.75%	5.35%	1.40%	FREE	$0/$0
UBank USaver	Highest Interest UBank USaver account.	6.51%	6.01%	0.50%	FREE	$0/$0
Citibank Online Saver	Best promo rate on the market! Apply Now so you do not miss out.	6.45%	5.25%	1.20%	FREE	$50/$20
RaboDirect High Interest Savings Account	RaboDirect give you a great rate for 6 months!	6.40%	5.00%	1.40%	FREE	$0/$0
St.George Direct Saver	Enjoy a high interest rate from one of Australia’s biggest banks.	6.15%	4.60%	1.55%	FREE	$0/$0
Bankwest TeleNet Saver	Bankwest has a great online savings account.	6.15%	4.50%	1.65%	FREE	$0/$0
NAB iSaver	Open an at calls savings account and link your transaction account.	6.00%	4.25%	1.75%	FREE	$1/$1
ANZ Online Saver	Link your ANZ Online Saver to your transaction savings account.	6.00%	4.50%	1.50%	FREE	$0/$0
Suncorp eOptions Saver	A high ongoing rate with fixed interest features.	4.75%	4.75%	0.00%	FREE	$0/$0

Internet savings accounts

With the rapid growth in technology and online usage Internet savings accounts have become extremely popular. One, they are simple and easy to open online and secondly having online access means consumers can shop round for the best rates.

But if you are looking for a multiple purpose account this is not the right choice. Internet savings accounts have very limited transactions available, so if you want to use BPAY, or make withdrawals, you would have to transfer funds across to your linked transaction account. The standard features of an Internet savings account are:

• No minimum amount required to open account
• Deposit or withdraw any amounts you choose
• Interest is calculated on a daily basis and added to your account each month
• No fees for account keeping
• No charge for direct debits and credit when available
• Not available at all facilities

It’s very easy to open an online savings account. This can be done from the comfort of your own home. Once you open your account you may find you are required to link it to another financial institution, such as your transaction account. You won’t always have to complete the 100 points ID check required to open Australian accounts, but have your details handy, along with your Tax File number and other bank account details.

Make sure you read the terms and conditions of the account before opening it. There have been occasions of Internet savings accounts offering a high interest return, but examination of the small print has revealed codicils stating that to obtain the high interest rate advertised you need to deposit a substantial sum in a bank related non-interest transaction account.

Term deposits

These types of accounts have been around for a long time, and are fairly straightforward. You invest your money for a predetermined time at a given rate of interest and there it is supposed to stay until maturity. If you need to break the term you usually are charged penalty fees for doing so. The downside of this sort of investment is that you don’t have any liquidity – your money is locked away for the term. Admittedly if interest rates drop you gain because your interest level is fixed, but the reverse applies too, if interest rates rise you lose out.

Term deposits can be taken out with banks, credit unions and other financial institutions. Interest varies but rates can be found that are similar to Internet savings accounts. The appeal to many people is the certainty, because the rates are fixed for the agreed term. Terms range from 3 months to a number of years. The fixed interest is paid into your account either monthly, quarterly or on maturity. Rates can vary dependent on how often the interest is paid, the size of your deposit, and whether the interest is compounded.

If you decide to roll over or reinvest your deposit when it reaches maturity, you need to check the rate, as these can change and revert to a lower rate in some cases. Always make sure you read the product disclosure statement for your investment. Before taking out any term deposit confirm that the financial institution you select is an Authorised Deposit Taking Institution (ADI).

Cash management accounts

Some consumers prefer a dual account which has the capability to handle both transactions and savings. Now whilst these might be convenient because everything is all in the one place, to gain any benefit from a higher interest rate you need to have a few thousand dollars sitting in the account. Quite often you will see promotions stating no fees charged on these type of accounts, which is a form of saving; but reading the terms and conditions generally indicates that the no fee rule usually needs a substantial amount (around $5000) to open the account, or a reasonable size amount deposited each month.

Dependent on your type of account or your balance some of the transaction or account keeping fees can be waived; whilst other accounts allow for a certain amount of free transactions per month before charging a fee. To gain the benefit of a high interest return you generally need to keep your balance above a few thousand dollars.

Traditional savings accounts

Sadly the traditional saver is not really a contender in the high interest stakes. They are at the back of the pack compared to term deposits, Internet savings accounts and cash management accounts. They had some appeal because of the occasional bonus rates and their liquidity, but that is being outweighed now by their lack of return on savings.

In most cases the standard interest rates on these type of accounts are fairly low; and frequently fall short of the better term deposits, Internet savings accounts and cash management accounts even when bonuses are added. Plus there can be conditions to receiving the bonuses such as making regular monthly deposits or not making any withdrawals.

Should I change my account?

It can’t be denied that changing to high interest savings accounts will gain you extra savings, which could be in the region of hundreds of dollars, dependent on your savings and deposits. It is pointless to leave your money sitting in an account that is not giving you any benefits, particularly when it becomes subject to everyday account keeping fees and charges that can whittle it down very quickly.

In today’s economy it is sensible to try and have some money put aside for that rainy day, holiday, or emergency; there is nothing worse than knowing you have no fallback position should something unexpected happen.

It is in your own interests to find an account that suits your planned savings pattern and will give you the best return on your investment. Making regular savings, whether fortnightly or monthly, can only improve your financial position and it is simple these days to organise or set up direct deposits from your salary into your savings.

You will be surprised at how quickly your savings can mount up when you have them in the right account, and they are working for you instead of the bank.

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