Please see information on Savings Accounts below.


What are Savings Accounts?

Many people in Australia want to make their money grow and accumulate over the years. They might do this for a variety of reasons maybe you want to have money put aside for your child's education, or perhaps you want extra security for when you reach retirement.

Whatever your reason, there are lots of ways of adding to your personal wealth. You could invest it directly by trading shares, or you could put a portion of it into an investment fund. These carry a constant risk to your money as they rely on the ever-changing financial market.

By far the most 'safe' way of accumulating money is by putting it into a savings account. A savings account will look after your money and allow it to build up interest over time. At the same time, that money is protected by a 'tax wrapper' it is not subject to capital gains tax.

Where can I get a Savings Account?

Savings accounts are offered by many of Australia's banks and also by some independent providers. They might even have a range of savings accounts, with differing features such as a fixed interest rate or term. Take your time and weigh up the options to get the best deal.

What Account Types are there?

You can generally choose from two main savings account types:

  • Fixed Term Deposit.

A fixed-term deposit is a savings account which offers a higher rate of interest than a standard one. In return for this, the account holder has to commit their money to that account for a set period of time and generally the longer this period is, the higher the rate of interest earned. During that period, the money in the account cannot be accessed or withdrawn.

  • At-Call Savings Account.

An at-call savings account allows the holder to access the funds any time. However, some financial institutions might restrict the withdrawal access and you may only be able to access funds during opening hours. Withdrawals can take up to 24 hours to process or the company might allow ATM withdrawals for instant access and even internet access.

You'll notice that banks and other financial institutions that offer savings accounts might give them their own brand name (such as the 'HSBC Serious Saver') but they will mostly fall into one of the two categories above.

However, they will carry varying features, plus- and minus points, extras and so on so do spend some time shopping around.

Who can Apply for a Savings Account?

Opening a savings account is like opening any regular transaction account at the bank.

  • You will generally need to be at least 18 years of age to open an account, although you might be able to open it on behalf of someone else a child, for example.
  • You may need to be able to link your savings account to another Australian deposit account with the same company though this may not always apply.
  • You will probably need to be a full Australian resident.
  • You might need a minimum opening balance or there may be no minimum. Check this with the provider.

Are there any Account Fees?

This varies according to company and account type. Some providers might charge admin or management fees, others will charge nothing at all. Another aspect to add to your comparison check list when looking for an account!

How does the Money earn Interest?

Interest on your savings is usually paid on a monthly basis. If you make a withdrawal or account closure, interest will not necessarily be payable that month.

So, as every 28th of the Month falls, interest is paid on your savings (the date changes when a public holiday or weekend falls on the 28th). Interest is calculated daily per a certain amount say, $1,000,000.

What are the Benefits of Savings Accounts?

A savings account carries many benefits:

  • Building up existing money and making it grow over time.
  • 'Safe' way to invest/save money.
  • Large variety of account types.
  • Can fix interest to protect against rate changes.
  • Extra money aside for when you need it later.

Savings accounts provide one of the safest ways to grow money. Unlike trading on shares or derivatives or putting money into a collective fund, your money is not at risk of losing value. It is not exposed to the volatile financial markets it can just sit undisturbed and collect up interest until you need it.

Are there any Disadvantages?

Savings accounts do not provide much in the way of disadvantages, but there are one or two drawbacks:

  • You might not earn that much interest not much growth.
  • Interest rates change.
  • You could make more significant growth with investment plans.

Savings accounts are useful but they may not accumulate a significant amount some accounts don't earn that much interest, and if your rate is not fixed then the funds will earn less or more interest as the base rate changes.

You might opt for a fixed term account and then regret it but it is locked away so remember to think carefully before you choose an account.

Putting your money in investment plans or trading might be more risky, but the rewards can be much more significant than from a savings account. What you choose to do with your personal wealth is up to you if you are less prepared to deal with risk then a savings account is a much safer option than other investment instruments.


Please Note: is not authorised to give advice under the ASIC (Australian Securities & Investments Commission).

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