Useful Savings Info

Why should you get a savings account?

Make the most of your savings
If you are saving money in your normal transaction account and not in a high interest savings account then you are really wasting your money and time. There are literally billions of dollars wasting away because people don’t realise they can be earning a higher rate of interest on their savings just by using a savings specific product.

Interest on normal transaction accounts
With everyday transaction accounts there is generally little to no interest paid on the account balance. Also, by keeping your money in a transaction account you are actually losing money in the long run because of inflation.

	Everyday Transaction Account	High Interest Savings Account
Opening balance	$5000	$5000
Interest Rate	0.01%	6.00%
Balance @ End of Year	$5000.50	$5309.16

How it works

Choosing a savings account
There are many providers of savings accounts to choose from so doing a little research and finding the one that suits your situation is always the smartest way to go. Check with your own bank to see what they can offer, and shop around and compare until you find the right one. Make sure to take into account the interest rate, but also any fees and charges and access restrictions that may apply.
Have it linked to your existing transaction account
Once you have chosen your savings account it is then linked to an existing transaction account that you would nominate. Then, generally by phone or internet banking you can transfer money from your existing account to your savings account.
Interest is calculated daily
This is generally done on the daily closing balance using a simple formula like the following: Daily closing balance x interest rate (as a percentage) / 365
Interest paid into account monthly
At the end of each month the interest earned is calculated and added to the balance of your account.
Withdrawals deposited into transaction account
When you need to withdraw money from your savings you can generally do it via phone or internet banking and transfer it back into your original transaction account. Any transfers between accounts generally take a day to clear.

Things to consider

Look out for specials
Some banks offer higher interest rates for a set period, it could be advantageous to keep an eye out and transfer your savings across to whatever account is paying the highest interest.
Be wary of tricks to get your business
There are quite a few marketing gimmicks that may be used so it’s best to check exactly what product will earn you the most for your deposit amount and spending habits. It’s also best to be sure that the starting rate wont plummet a certain period after opening the account.

Some banks may advertise rates that are available only on balances above a certain amount. Double check which interest rates will be applicable to your account balance.
Having your salary paid into your savings account
It may be a smart idea to have your pay go straight into your savings account, then transfer out money as you need it. That way there is the maximum amount of money in the account all the time and you will earn more interest.
Don't just compare rates
Always take into consideration any fees and charges the account might have and any restrictions on withdrawals or payments or whether you have to deposit a certain amount to open the account. Ask whether there is a fee to close the account or to swap to another bank.

How to Save

Don't overlook the obvious: avoid extravagances, and be active in comparison shopping. Too often we overlook these obvious bits of advice to our own detriment.
Make savings as automatic as possible. It's harder to save if you actually have to look at the money first before you put it away-it's just too tempting to spend what's in your hand.
Avoid credit card debt. It may be advantageous to keep a credit card for emergencies and convenience, but the interest charged on credit card debt is very high and will quickly drain your ability to save. Keep the card in your wallet, and use cash instead whenever possible.
By carefully selecting your high interest savings account you can avoid most, if not all, bank fees and monthly charges. Choosing an account with no monthly service fee will help your savings grow and your interest multiply faster.
Take advantage of unexpected income. If you receive extra money from odd jobs, refunds, lottery winnings, or bonuses, avoid the temptation to spend it all. Take a little off the top and go out for a nice dinner, but then put most of it into your high interest savings account.
Don't make excuses. It's very easy to come with reasons why you can't save, but the fact is, anybody can do it. Even if it's not a lot to begin with, start today - regardless of your situation, how much or how little you earn.
Stay on top of interest rates. Rates can vary from month to month, so make sure you're aware of which direction rates are going. If rates are fluctuating, you may earn more money by moving your funds into a different account.