Savings Account Fees for Switching and Opening Accounts

When it comes to creating and stick to a savings plan, you could be facing any number of barriers, real and imagined. This is why some common myths about barriers surrounding high interest savings accounts are being explained and busted right here, so you don’t need to make any more excuses, and nothing needs to stand in the way of your reaching your savings goals.

You have to keep money in your high interest savings account to avoid fees. BUSTED

This high interest savings account myth is untrue because most dedicated Australian savings accounts are fee free and independent accounts, so if you’re not using your high interest savings account, it won’t be charging you fees. Bank fees are charged when your provider has to handle your money or manage your account and that is why high interest savings accounts are fee free, because they are primarily online accounts. When a savings account is operated online, there is less involvement required from your provider because you can make your own deposits and withdrawals, check your own balances and make your own payments unaided.

Plus, most high interest savings accounts don’t require a minimum balance to be maintained, most don’t even require a minimum opening balance. Those accounts that do have minimum balance requirements often need just $1 as the opening balance, which you may need to maintain to keep the account open.

Your high interest savings account will charge you to switch accounts. BUSTED

If you choose to switch from one high interest savings account to another, because your needs have changed, a new account has come onto the market or you find you would prefer a different range of features, your current high interest savings account will not penalise you with fees for the switch.

The only penalties you may see in switching high interest savings accounts is if your current account is one which reduces your interest earned when you make withdrawals. If this is the case, when you make a withdrawal from your current account, to switch to a new account you will earn a reduced interest rate for that month. To combat this, make the switch on the first day of the month, after you have been paid the interest from the previous month; high interest savings accounts which penalise your interest for withdrawals do so for the current month, and if you switch before the month has really begun, you are not losing anything.

Also be aware that unless you are using a high interest savings account with an Any Pay function, to move your funds from your existing savings account to switch to a new account, you will have to transfer them through your linked transaction account. After the deposit has arrived in your transaction account from your old savings account, you will have to withdraw it to deposit into your new account, and the withdrawal fees will depend on your transaction account fee structure.

If you are using a dedicated First Home Saver high interest savings account to save for a house deposit, and you want to switch your funds to a different savings account, you will not be charged fees, but you will be denied access. This is because a First Home Saver Account is a government initiative which pays higher interest and offers government contributions and tax exemptions to fist home buyers; if you change your mind about saving for a house deposit, you don’t get to continue to reap the rewards of a First Home Saver Account. Instead, the balance will be transferred to your superannuation fund, and the First Home Saver Account will be closed. You won’t be able to access the funds in your superannuation until you reach 60 years old.

You can’t have multiple high interest savings accounts. BUSTED

Unlike having to get approval for a credit card application, applying for a high interest savings account is usually only dependent on the provider being able to verify your age and identity. Therefore, it is entirely possible to open multiple high interest savings accounts.

Plus, because the accounts are free, even when they are inactive, they are not costing you any time or money to manage because you can simply ignore them. Therefore, if you open a high interest savings account, reach a savings goal and transfer your funds out to achieve that goal, then you don’t need to close the account, you can leave it open in case you want to use it again in the future. If, for your future savings goals you find a different high interest account which offers a better deal, you can take advantage of that deal without having to worry that you already have a high interest account open.

Just remember that even if you have left just a few dollars in a high interest savings account to satisfy a minimum balance requirement, those few dollars can still earn interest that you will have to report at tax time. Therefore, when the end of the financial year rolls around, simply collect the statements from each of your high interest savings accounts and provide them to your account to report any interest income.

When you choose a high interest savings account for a particular goal, you don’t need to feel locked in, because the accounts are as flexible to move between as they are to use.