Unlike the everyday account that you use to do your day to day banking, a savings account pays you interest on money you save.
When it comes to choosing a savings account, there’s more than just interest rates and fees to think about. You’ll also need to consider the different ways that accounts work. You can go one of two ways. One choice is a savings account that pays you bonus interest when you save responsibly. Your other option, high-interest online savings, let you move money in and out as much as you like so long as you do it online or over the phone.
You don’t need to answer too many questions before you’ll know which sort of savings account is right for you. All it takes is a quick look at how you do your banking, why you’re getting a savings account, and how you’re going to use it.
Do you bank online, or in-branch?
But if you prefer visiting your local branch to manage your money, online savings isn’t for you.
If you don’t have much experience making transfers or checking your balance online, there’s always time to learn about the basics of NAB Internet Banking.
Are your savings for dipping into every now and then, or for leaving where they are?
Why are you getting a savings account? Is it just a place to put money that you don’t need this week, or are you saving towards a more serious goal?
If you might need your savings tomorrow, keep them online
Online savings accounts work for people who want to grab a bit of extra money when they need it. If you’d like your savings to be there for an unplanned taxi ride home on Saturday night, or as a top-up to help with the phone bill when it arrives each month, online savings is for you.
Saving online lets you move money in and out as much as you like without changing the interest rate you earn, or charging you any fees. That can make it difficult to stick to a savings plan, but it’s a perfect way to earn interest on your money when it’s spare.
If your savings are locked away for later, bonus interest helps keep it there
Reward saving works best when you have a well planned budget and know that you don’t need your money for at least a few months. You could be putting it aside for going overseas next summer, or have something bigger in mind like a house deposit or even your kids’ education.
When you know what you’re saving for, it’s important to keep that money “hidden away”. Reward savings accounts help keep you motivated to leave your money in the bank, earning interest. If you do take money out, you lose that month’s bonus interest (which is most of the interest you earn).
Do you have a single savings goal, or do you just want to earn interest?
What’s your goal? If all you want to do is earn interest on your money before you spend it, high-interest online savings sounds right for you. If you have a goal – like a holiday, wedding, house deposit or new car – then the way reward saving works might suit you better.
Especially if you find it difficult to always keep to your savings plan, it can help to have the motivation of earning bonus interest every month.
Can you put some money aside at least once a month?
If you’re leaning towards reward saving, this is important. Your budget needs to let you save something at least once a month. (You need to make a deposit into your reward savings account each month to earn your bonus interest.)
If you’re sure that you can spare, and save, something each month then you’re okay. If not, it’s best to get an online savings account which doesn’t need you to stick to any particular schedule and pays interest on every dollar no matter when you save it or how long you leave it there.
Are you looking for a kids’ savings account?
This is an easy one. If you’re looking for an account for someone under 16, then online banking is not the way to go. Australia has laws that restrict the ways kids under 16 can bank.
Instead, there are specialised reward saving accounts for children.
Or are you just chasing the best interest rate?
Interest rates for savings accounts are variable, which means they can change any time. They might move up or down, and there’s no promise that the account with the highest interest rate this week will still have the best rate next month.
While online savings accounts have some limitations, like no branch access, one of the popular extras these accounts offer is bonus interest for the first few months you have the account. This could be the encouragement you need to get your savings started.
If all you want to compare is interest rates, you can see all our current savings account rates in one place and make your choice.
Do you have a variable rate home loan? Offset could be better than savings
With 100% offset, your money can save you more in home loan interest than it would earn in a savings account.
How will you make your decision? Let us know
We’d love to know which savings account you end up choosing, and how you decide. Leave a comment telling us what account you went for, and how you made your decision.