Choosing your Savings Account
Savings Account is now perhaps the most popular type of bank account in Australia, much more popular than the cheque accounts.
What exactly is a savings account? A lot of consumers actually do not know the difference.
A Savings Account is basically an account that allows you to transact easily, indeed, it is not really that different from cheque account, but in Australia, savings account usually do not come up with cheque books, and usually will pay some interest rate.
Savings accounts are becoming very popular due to the changes in the way we use our bank accounts:
- Less and less cheques are required
- Savings accounts are now linked with Internet for payments
- Savings accounts are much more flexible than term deposits
- Increasing competition, more banks offering savings accounts
- Savings accounts have higher interest rate than cheque accounts
- Some savings accounts have competitive interest rate to term deposits
As Internet banking becomes popular, consumers are using Internet banking as the primary method for transactions, they do not require cheque accounts anymore, some have even argued that cheque accounts will eventually disappear next 10 years.
Savings Accounts – What choices do you have?
- Major banks – savings accounts are available from all the major banks in Australia, namely NAB, CBA, Westpac, ANZ and St George Bank
- Smaller Banks – Smaller banks are all offering savings accounts, Suncorp, BankWest, Bendigo Bank, Bank of Queensland and many more.
- Credit Unions – You can also apply for a new savings account with credit union and building societies.
- Foreign Banks – Foreign banks are gaining significant market share in Australia, led by HSBC, ING and Citigroup
Online Savings Accounts is becoming very popular, this was initially introduced by foreign banks such as ING and HSBC which had grabbed significant market share from traditional savings accounts.
These online savings accounts have high interest payment features and are especially popular for the net generations.
Choosing the right savings account
You may think choosing a savings account is very easy, it is not, and before you know it, you may end up with 7 savings accounts, which is really waste of money and time.
- Every bank wants your savings account – banks love to have you as customers so they will tell you all the good things about their banks.
- What is exactly the purpose of your savings account? Are you looking for a savings account as for transactions? Or are you looking for a savings account for savings.
- How much can you deposit? If you can keep your minimum balance in your savings accounts, typically $1000 to $5000 range, then you can waive the accounts keeping fees.
- How often do you transact? Higher interest rate savings accounts usually means limited free transactions, additional transactions will incur fees.
Fees associated with Savings Accounts
Some banking analysts once comment that Australian bank accounts are the most expensive bank accounts in the world. This maybe true in many ways, therefore, you must understand the fee structures.
- Minimum Account Keeping Fee: This is almost universal across all the savings accounts in Australia, the fee is between $5 to $10 each account. But, this can be waived if you can keep the minimum accounts balance.
- Transaction Fees – Each savings account has fee free transactions, but additional transactions could attract fees.
- Inter-bank Account Transaction Fee – This is a common fee for Australian bank accounts, if you access cash from non-bank ATMs.
- ATM Card Fee - Savings accounts are usually issued with an ATM card, sometimes with a credit card. Additional cards may incur additional fees.
- Overseas Transaction Fees – One of the most expensive items for Australian bank accounts, there are 2 fees: One, the currency account fee for receiving or sending the funds from the account, two, exchange rate differences. If you have regular overseas fund transactions, it maybe easier to have a foreign currency savings account.
- Accounts Statement Fees – Another hidden fee often associate with Australian bank accounts, this fee varies considerably across savings accounts, it can be based on per statement or if you request a print copy.
- Over the counter Fees – Another common fee that account holders should be aware off. This fee is only applicable if you need to do a transaction in the branch.
Interest Rates for Savings Accounts
You can achieve nice savings from your savings accounts if you shop around. Again, use Internet to compare savings accounts, there are always special deals around.
Online Savings Accounts is a good starting point for you accumulate your savings, this type of accounts do not have ATM facilities, therefore, cash withdraw is more limited.
Online savings accounts are linked to another savings account for transaction, this is the nominated account for you to make further deposits or withdraws,
Interest rate for online savings accounts are quite attractive, and there is usually no account keeping fee as well.
So, there are many choices for savings accounts in Australia, again, shop around, do more web research, and you could surprise yourself.
