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5 things to look for in a savings account
15 June 2022
Saving money isn’t always easy. So once you’ve put some funds aside, you’ll want to make sure that your savings account is working as hard as you are.
The right savings account will help you grow your money, but it should also work with your saving habits and goals.
Each year, Canstar’s expert researchers assess and rate savings accounts using a unique methodology that compares both price and features. The top performing savings accounts are given a 5-Star Rating.
Here are some of the questions they consider when assessing accounts.
1. What type of saver are you?
Are you willing to meet stricter savings conditions to score a higher interest rate? Or do you want to maximise your savings without worrying about meeting savings conditions each month? The answer to these questions can help you work out the type of savings account that would suit you.
Canstar compares savings accounts for both types of savers, called ‘regular savers’ and ‘flexible savers’ by our researchers.
If you don’t need access to your savings for a long period of time, you could also consider a term deposit. Term deposits lock away your money for a set term (usually between one month and five years) and in return you can earn a fixed rate of interest.
2. What is the interest rate?
The higher the interest rate, the quicker your savings will grow. There are a few different types of interest rates to look out for.
Introductory or promotional rates are only offered for a set time period (such as the first four months) before dropping to the base interest rate.
Bonus interest rates are higher interest rates that apply if you meet certain conditions each month, such as if you deposit a certain amount into your account. If you don’t meet the conditions, you will earn the base interest rate only.
→ High interest savings accounts in Australia
3. What are the fees?
Fees can reduce your savings, so it’s best to look for a fee-free savings account. Most savings accounts do not charge a monthly fee, but it’s worth double checking if any monthly fees or transaction fees apply.
To open a savings account with some providers, you will also need to open a linked everyday transaction account. So it can be worth looking at whether there are any fees on the linked transaction account too, including monthly fees.
4. What are the interest conditions?
You can usually earn a higher interest rate by choosing a bonus savings account. But you’ll need to work for it. So look at the interest conditions and work out whether you will be able to meet them each month.
Some common conditions include:
- depositing a certain amount
- making a certain number of card purchases with a linked everyday transaction account
- growing your balance
- making no withdrawals.
Some accounts also set minimum and maximum balances on which they will pay interest and this may impact the interest rate offered. For example, you may only be able to earn bonus interest on balances up to $100,000. So check whether there are any limits and if this works with your current savings.
5. Are there any useful features?
How easily you can make transactions and manage your savings account can also be important. Some savings accounts also offer budgeting and savings tools, which could help you grow your savings.
For instance, some banks now offer round-up savings features. This rounds up purchases you make with your linked transaction account to the nearest dollar and transfers the change into your savings account. Some providers also let you create multiple sub-accounts, which could be handy if you are saving for multiple goals.
For more information on how Canstar’s researches and rates savings accounts, check out our Star Ratings methodology.
Cover image source: Ake Studio/Shutterstock.com
This article was reviewed by our Sub Editor Jacqueline Belesky before it was updated, as part of our fact-checking process.
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