Savings Accounts Australia
Savings Accounts Australia is a common search term for people looking for a low risk way to grow their money. However, did you know that a lot of Australians actually have no idea how savings accounts work? or how they differ from transaction accounts and term deposits?
If you put your money into a savings account it will earn interest on the balance every day and will pay out that accrued interest at the end of the month. This is in comparison to a transaction account which is the account used by people to make purchases. Transaction accounts (minus a few exceptions) do not pay interest. This is why it is important for people to have both kinds of account. Put simply, a transaction account is where you spend, while a savings account is where your money earns interest.
Savings Accounts Australia
Savings accounts are often compared to term deposits. But what is the difference? With a savings account you can put funds in and take them out at any time. You may lose some of your accrued interest and/or may pay a transaction fee but you are able to access that money straight away.
Term Deposits AustraliaA term deposit on the other hand allows you to lock your money away for a fixed term at a fixed rate of interest. The benefit of a term deposit is that you get a fixed amount of interest compared to a savings account where the interest can change based on the balance and variable interest rate. You also can’t access the funds from a Term Deposits straight away. Typically you will need to give 31 days notice before being able to access the funds unless hardship applies. You’ll also lose a portion of interest (how much this is depends on how early in the term your Term Deposit is broken) and likely pay a fee.
People are now able to search for Savings Accounts Australia wide rather than just taking the one offered at the local branch of their parents. But be careful! Banks often get people hooked in by offering a bonus rate that only applies for a few months. So make sure you always read the terms and conditions as what started as a great rate can quickly turn into a mediocre one only offering more than one percent!
Furthermore, some savings accounts either require you to deposit money into them every month. This means you’ll likely have to open a transaction account with them to to get your money out. Make sure you know what your obligation is to earn the interest before opening the account.
Rates on savings accounts have been very low for some time now. Speak to your financial adviser about alternative fixed income investment options that can give your retirement a boost!