Savings Accounts – Glossary of Terms

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Important Notes

These are a general explanation of the meaning of terms used in relation to savings accounts.

Policy wording may use different terms and you should read the terms and conditions of the relevant policy to understand the inclusions and exclusions of that policy. You cannot rely on these terms to the part of any policy you may purchase.

Refer to the product disclosure statement and Canstar’s Financial Services and Credit Guide (FSCG).

Account Keeping Fees – Account keeping fees are charged to cover or partially cover the lender’s internal costs of creating the account.
Annual Equivalent Rate (AER) – This illustrates what the interest rate would be if interest was paid and compounded once each year. This allows individuals to compare more easily what return they can expect from their savings over time. As every advertisement for a savings product that quotes an interest rate must also quote an AER, you will be able to compare more easily what return you can expect from your savings over time.
Bonus savings account – Accounts that give bonus interest whenever the account holder makes no withdrawals and deposits a certain amount of money into the account each month (usually around $50 or $100).
BPay – An electronic bill payment system in Australia that enables payments to be made through a financial institution’s online or telephone banking facility to merchants who are registered BPAY billers.
Cash management account – A savings account for high balances (usually $10,000 – $20,000 or more) that provides a higher interest rate as well as the flexibility of a transaction account.
Compound interest – Interest is determined by using the entire balance of your savings account, including all the interest you’ve accumulated on the account so far and the deposits you’ve made. This is different to simple interest, which means only paying interest on the principal amount (the amount you originally deposited). Almost all savings accounts use compound interest.
Debit card – Also called a cheque card or bank card. A card that is linked to a bank account and allows the user to make purchase transactions with merchants and withdraw cash from ATMs.
Deposit – Money that you put into an account with a bank or financial institution.
Direct Deposit – When money is automatically debited from (taken out of) your account and deposited (put into) someone else’s account. One example is when wages are automatically deposited in an employee’s bank account, rather than having them receive a physical cheque. Another common example is if you set up a direct debit for your monthly car insurance premium, so that you don’t have to remember to pay them each month.
Introductory Rate – The opportunity to receive a fixed introductory bonus on a variable interest rate account, for a set period of time from the date of account opening. At the end of the bonus period, base rates will apply.
Junior savings account – Savings accounts for children, where a parent operates the account in the child’s name but the child also has access to their account.
Online savings account (OSA) A savings account that is primarily managed on the internet.
Promotional Rate – An introductory interest rate that is usually only offered for a specified promotional period. After the promotional period ends, the interest rate will generally revert to the base rate.
Savings account – Bank accounts that pay significant interest but cannot (or should not) be used directly for transactions. These accounts tend to have higher interest rates than transaction accounts. They can also be linked to transaction accounts for easy transfers and better availability of funds.
Term Deposit – An investment where a certain interest rate is guaranteed for a particular amount of time on a deposit, and the investor agrees to leave the money in the account for that amount of time. The interest rate is usually higher than that of a savings account, but there are substantial fees if the investor chooses to withdraw their money before the agreed-upon date.
Transaction account – A deposit account that serves the purpose of providing frequent access to funds in your account, through branches, ATMs, and use of cheques and debit cards.
Youth savings account – Savings accounts for teenagers or Under 18s, and sometimes also for tertiary students or Under 25s. The youth usually owns and operates the account in their own name.
Withdrawal – When instructions are carried out to pay money out of your account (e.g. cash taken out of an account).
Wire Transfer – Similar to a bank transfer, a wire transfer is when you instruct the bank to send funds to designated account.

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