Linked Savings Account with your Transaction Account

A high interest savings account does not give you access to your funds with an ATM and EFTPOS card, or a credit or debit card. You also can’t usually write cheques from a savings account or pay your bills online, the primary goal of a savings account is to help you save and maximise those savings, not give you access to them. However, you still need a way to deposit your savings into your account and this is why you need a linked transaction account.

What is a Linked Savings Account?

While you can’t get your funds out of your savings account using any of the traditional methods, you also can’t usually make cash or cheque deposits to a high interest savings account either, this is why you need a linked account to allow you to transfer funds in and out when you need them, and this means your savings are at call.

How a linked savings account works:

• A linked account will be from the same provider as the savings account, or be another personal account in your name. To link a transaction account you need to choose an account which has the same name as the name in which you’re opening your savings account. A linked account can be any personal account as high interest savings accounts are primarily for business use and unless specified that the account can be for corporate use, or used as a self-managed super fund, you must link to a personal account which identifies you as the account holder.
• You will be provided the bank details for your savings account to make transfers. Just as you enter the BSB, the account name and the account number when you are transferring money to another account online, from your linked account you simply enter the details of your savings account in the Any Pay section of your transaction account’s internet banking system.
• Savings accounts are operated online and may charge high fees for offline transactions. High interest savings accounts are able to offer such competitive rates and waive all account keeping fees because they are opened and managed online. Therefore, this saves time and money for the bank and they pass these savings onto you. Therefore, when you make deposits in a branch or go to a teller to withdraw your savings you are likely to incur transaction fees which will eat into your savings.
• You need a linked account because not all savings account providers have branches. In some cases even if you wanted to make a deposit in branch or write a cheque from your savings account you couldn’t no matter what the fees because many online savings accounts are offered by providers who don’t have branches in Australia. This saves the banks even more money in overhead costs and they still offer you the service you need by having 24/7 Australian based call centres. As a result, the only way you can access your savings account funds is online through your linked account.
• Transfers from your linked account to your savings account can arrive at differing times. Interest on your savings account is calculated daily and if you lose days while your funds are in transit from your transaction account to your savings account you can also be losing interest. Therefore, make sure you check with your transaction account provider about how long a regular transfer to an online savings account will take.

Why You Need a Linked Account

The linked account is one of the most important parts of your savings account and savings plan because it removes the access you have to your funds. If you were given an access card or a debit or credit card for your savings account, the temptation would be overwhelming to spend your savings when you were out to dinner or in the mall, ignoring your savings goals.

However, by adding a level of distance between you and your savings you can’t access your funds unless you are logged into internet banking and have transferred them to your transaction account. This means you are less tempted to spend your savings before you reach your goal, and can learn better control and achieve better financial security.

External Linked Account vs the Same Provider

Some savings accounts will allow you to choose a linked account from any Australian bank, while others will require that your savings account is linked to one of their eligible transaction accounts. If you do need to open a new transaction account with your savings account provider, this can usually be done in the same application.

Benefits of an external linked account:

• There is a time delay between your transfers from your savings account. This means that even if you are tempted to access your savings for a purchase outside of your original savings goal, you will have to wait at least one business day for the funds to arrive in your transaction account. This can help assuage the urge to tap into your savings for an impulse buy, because by the time the funds arrive, the impulse would have passed.
• You don’t have to leave a transaction account you are happy with. If you have already spent time shopping around for a transaction account which has all of the features you need and want, then you will probably want to consider a savings account which doesn’t require you to open yet another account, if you’re happy where you are.
• You’re not opening another account, with its own fees and charges. If you have to open a new transaction account with the provider of your savings account, not only do you have to add another card to your wallet and use another provider’s branches and internet banking systems, but you also have another monthly account keeping fee to keep track of.

Benefits of a linked account from the same provider:

• There isno time delay between your transfers to your savings account. Interest on your savings is calculated daily and if when you transfer from an account with the same provider, the transfers will be available immediately and will be earning interest right away, rather than losing earning time in transit.
• You can open a transaction account which better suits your needs. Take the opportunity to review your current transaction account and see if there is a better deal out there. If you are opening a new transaction account with your savings account provider, the bank will often waive account keeping or transaction fees for multiple products.
• Save on fees between accounts from the same provider. If you are transferring money between accounts which are held with the same bank, these transfers do not attract transaction fees, where transfers from external linked accounts might.

To compare the linked account options of the top savings accounts in Australia, view the Savings Account Finder™ comparison tables here. When you have chosen the option which best suits you, sign up right now by following our secure links to simple and secure online application forms.