Online Savings Accounts
It is apt that the first post on MonoMoney deals with maximizing your money.
I want to talk about online savings accounts, which have become widely used and very popular over the last few years. It all started a few years ago with INGDirect.
INGDirect are an online only bank. Several years ago they introduced an online-only banking account with no fees, which earned a high-interest rate.
This was brilliant for the individual, allowing them to start earning some real interest on their cash. As well as encouraging people to start saving.
It wasn’t long before the brick-and-mortar banks followed with their own online-only bank accounts. Now most banks and building societies have some sort of high-interest earning online-only account available. But as you will see, some are better than others.
Now is the best time to start saving money too. With interest rates at an all time high you can earn over 7% pa just by parking your money in one of these accounts.
But not all accounts are created equal. So when shopping around for a good high-interest earning online account you will want it to have the following characteristics:
- High Interest. In the current economy, with its high interest rates, you shouldn’t be settling for a low return on your funds. As the writing of this article you should be looking at return of no less than 6.5% pa.
- Free of Charges. Online accounts should be free. Steer clear of any banks that are charging you for keeping an online account. Most banks only offer a free online account if you have one of their standard accounts as well. This is okay so long as you aren’t paying the monthly account-keeping fee just to have the online account. If you are, change to a completely free online account or use the account you are paying for.
- No Minimum Deposits. Also stay away from any account which supposedly rewards you with “bonus” interest if you deposit a minimum amount or requires you to make a minimum monthly deposit in order to receive the high interest rate. There are always catches with these types of accounts and you could miss out on your interest if you miss a deposit.
Another characteristic I would look for in an online account, especially if you find it hard to save, is for it to be with another bank than you currently bank with. Why?
It will stop you easily accessing the money you transfer into it. And this will allow you to grow your money even faster.
Here is a list of the best online accounts I could find:
- INGDirect Savings Maximiser - 6.90% pa. No Fees. No additional accounts needed. No minimums. Learn more at INGDirect
- Suncorp eOptions Account - 7.10% pa. No Fees. No additional accounts needed. No minimums. Additional interest earned for locking away money for the short to long term. May use account to pay bills via BPay and freely transfer in and out of it electronically. Learn more at Suncorp
- Suncorp Everyday Options Sub-Account - 7.15% pa. No Fees. Must attach to Everyday Options Account (which has standard monthly account-keeping fee). No minimums. May use account to pay bills via BPay and freely transfer in and out of it electronically. Learn more at Suncorp
- NAB iSaver - 7.05% pa. No Fees. Must attach to regular account (which has standard monthly account-keeping fee). No minimums. Learn more at NAB
There are other accounts out there offering slightly higher interest rates than those above but they all have hidden and not-so hidden conditions that must be met. If you think you can easily meet these (like making a set minimum deposit each month without withdrawing any of it) then the higher interest would be beneficial for you. Just be careful and, of course, read the fine print.
Image credit: Odalaigh
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[...] now however, and I owe it all to a simple little trick: setting up a savings account (preferably a free high interest account) and putting aside a set amount - enough to cover all your bills - into this account every [...]