What to Look for in a Savings Account
Each savings account has different features and what suits one person may not suit another. You may want your savings account to act as a place to stash that cash you are saving for a special treat like a holiday. In this case, you will look for high interest rates above other features. Low fees are always attractive, but if the fees are for transactions and you don’t plan on doing any, then it won’t concern you.
Compound interest is another thing to look for in a savings account, especially if you are simply saving for a rainy day and have no firm plans for a withdrawal date. While it can be tempting to withdraw and spend your interest, if it is left in the account you will be paid interest on your interest.
If you want your savings account to simply be a place where you keep all your money, and you intend to use it to pay all the bills that come in, then you will want other features such as free transactions and a chequebook. You may also want the choice of ATM, Bpay and other more modern ways of moving your money around. You will also need to be able to withdraw your money whenever necessary, so a cash-at-call feature is what to look for. Most accounts have a daily limit, so make sure yours has enough to service your needs.
Savings Account selection tips
Some accounts will allow you to start off with a nominal amount such as $1; others require a larger first deposit such as $1,000. But some saving accounts can be opened with a nil deposit. This is good if you need to open the account without being there in person, then transfer money to it electronically from another account.
An excellent feature to have in a savings account is lower fees for a balance that is kept over a certain limit. This is easy to do if your account is not also to be a transaction account. For a savings only account, you can be sure that the limit will not drop low enough to attract the higher fees. Special purpose savings accounts often offer higher interest rate if no money is withdrawn over a certain period of time.
The safest place to save your money is with an institution that is accredited by the Australian Prudential Regulation Authority (APRA). Most banks, credit unions and building societies are, but there are some that are not. These may offer better returns, but the risk of losing your money is also greater. To find out, go to the APRA’s website to read the list of institutions that are authorised by them.