You’re onboard with the idea of a savings account- a dedicated account where you put aside money for a future purpose.

Saving accounts help you grow your money faster by offering a higher interest rate than everyday transaction accounts.

They are often online and don’t have a debit card so it’s not as easy to dip into your money.

But there are so many accounts, and it can be difficult to decide which one to choose. There are basic savings accounts and then there are those that have several criteria you need to meet to earn extra interest.

So, what should you look out for when choosing a savings accounts:

Check the interest rate

In the case of savings accounts, interest is money you earn on the funds you have deposited into the account.

The first thing to check is the interest rate. How much interest will you be paid?

Interest is usually calculated per annum and is paid monthly.

You can use our handy savings calculator to see how your money can grow with different rates.

Special introductory offers

Some accounts will offer ‘honeymoon’ rates to entice you to open an account or switch from another financial institution. This rate might be very attractive but usually only lasts for a limited time, like 3 months or 6 months then the rate is lowered. You can accept the new rate or shop around and take your money elsewhere.

Bonus rates

Some accounts will offer a relatively low monthly interest rate, as a base rate, but offer a bonus interest rate if you meet certain conditions.

The conditions might be things like-

No withdrawals during the month.
You must add a specified amount to the account every month. The amount might vary from $20 to $1000.
You need to grow the balance every month (so the balance is higher at the end of the month).
You need to have another account linked to the savings account.
You need to make a certain number of transactions in the linked account.
If you are under a certain age eg. accounts for people under 25.

If you don’t meet the conditions, you will only earn the base interest rate.

Check to see if the account you are considering has any conditions. There are some great conditions designed to help you to save, like a minimum monthly deposit but there are also some that are more complicated. Either way it’s important that you are fully aware of what you need to do to earn a higher interest rate.

For some people, these conditions might create discipline and a strong incentive to grow their savings which could be a good thing. But they might also be frustrating if you can’t quite meet all the conditions. You might be better off with an account that has less strings attached.

Check the fine print

Check the terms and conditions. The best option is a no-fee savings account, you don’t want account fees to eat up your savings.

Also check if you need to keep a minimum account balance.

Shop around for the best rate

Some people like to get the best interest rate possible and are happy to do the research, find the best rate and move their money. If you have the motivation, time and energy to chase the best rate, welcome to your new hobby! It isn’t for everyone but you should review your savings account at least every 12 months and check to see if your interest rate is competitive.

Just pick one and go!

The choices of savings accounts can be overwhelming but don’t let that hold you back from your savings habit. The best savings account is the one that you add to regularly.

Choose an account and start putting even small amounts away on a regular basis. Set up an automated transfer from the account your wages go into and you’re off. Time flies by and those small amounts can start adding up and if you find another account along the way that suits you better, you can always change.

Please note this information does not take into account your personal circumstances and is general advice only.