5 Things To Look For In A Savings Account

Tuesday, March 6th, 2018

If you are serious about being in the market for any type of loan, the foundation for loan application success is your own track record of saving money. Whether credit is applied for directly to a bank or financial institution, or via a loan broker or mortgage broker, ensuring that some solid savings sit in the background is one of the first things a potential lender will check on.

If your loan application approval hinges on the amount you’ve been able to save as a deposit to work in tandem with a loan, then it’s more important than ever to choose a savings account offering the best possible benefits.

Choosing The Best Savings Account

With so many savings account products on the market from a plethora of lenders, it’s important to realise that choosing the right one isn’t always just about the interest rate. Before you sign up to a savings account to hold your money, there are important questions to ask first. The truth is that, although saving money with consistency is a very good habit to have, it isn’t always easy. Putting funds aside with regularity takes discipline and for all that effort, being rewarded with a savings account that gives more than it takes in account keeping fees and administration charges is a must. Comparing the many rates and fees attached to the huge number of savings accounts on offer can easily seem overwhelming but because there really is no one-size-fits-all, it is worth doing some research to find an account that works positively with the way you handle money.

To help you navigate the maze, if you start by considering the following important features, you’re off to a good start.

1. Look for a competitive interest rate

While the official cash rate is low, every additional basis point of interest does have an impact. Although the days of double-digit returns on savings accounts has been over for many years, there are still good rates available.

Don’t be fooled by ‘welcome’ rates. The lure of introductory interest rates can be great but they typically only apply for a set period before returning to the lower base rate.

Remember that some advertised interest rates are just introductory rates or bonus rates. Introductory interest rates generally offer high bonus rates that apply for a set time period before reverting back to the lower base rate.

Bonus rates can also seem positive but they come with the condition of various requirements – such as no withdrawals or one deposit of a minimum amount being met during a month. If those conditions aren’t adhered to, the base rate is all that applies.

Term deposits seem to offer great rates but the downside is having your money locked away for months, or even years, to access the benefits. Check out the CANSTAR database to compare.

2. Beware of the fees

It seems that, the higher the interest rate, the higher the fees too – but often we don’t bother changing bank accounts because we see it as a chore. However, it does pay to shop around.

Types of account-keeping fees around include:

3. Choose the right type of savings account

CANSTAR’s article about different types of savings accounts on offer from banks and credit unions is interesting reading and worth exploring to help you identify your ‘saver profile’. Plus with some accounts actively set up to support students in their earliest days of the savings/part-time employment journey, there are some accounts that are better than others, depending on your circumstances.

4. Access all areas?

Whether or not you can physically access a branch in person is not as important as it once was but can still be a deal-breaker, depending on your banking preferences. What might matter is a streamlined mobile banking app and easy access to online banking. Looking at the number of ATMS your bank has available may also be important to you – especially to avoid those costly ATM withdrawals from banks other than yours.

5. Free transactions and fee rebates

Fee rebates can help boost your savings account but always check the number of free transactions on offer to ensure it’s not a false economy that trades one benefit for another negative.

Taking the time to research the best savings account to suit your needs is always a good thing. Even just a few extra dollars here and there does add up and can be the difference that turns good savings into great ones. If you are applying for a loan, talk to a finance broker for their opinion on how to choose bank accounts that help you manage your repayments in the most efficient and effective way and give you the best possible rates that help your savings grow, while still dealing with the regular repayments you need to stay on top of your loan obligations.

Contact Loans Actually today so we can put you in contact with one of our experienced Brokers to help you make the best decision.  Call us on 03 8805 1850 or email glenn@loansactually.com.au.

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