Over the last five years in Australia online bank accounts have become a popular way for many people to save money.
While access to these online accounts is restricted in many ways compared to traditional transaction accounts, the popularity of internet banking and phone banking has made these online accounts both useful and convenient for a great many people, not to mention it is a great place to park un-used funds or to save for what your want.
What Is An Online Savings Account?
Like more traditional term deposits, an online account earns a high rate of interest, but unlike a term deposit, there is no fixed investment term and you can withdraw your money any time you like.
Growth Of Online Savings Accounts
Since the inception of online bank accounts into mainstream Australia, every bank has been falling over themselves to give better and better interest rates to entice customers to deposit their money with them – offering higher promotional rates for the first few months or offering an even higher rate with high minimum balances.
This overwhelming popularity has even lead to the creation of online-only banks (INGDirect being the most well-known of these) to cater for investors and net-savvy customers who like the idea of doing all their banking online. These banks don’t have brick-and-mortar stores you can walk into and so access to the funds you have with them is via internet banking only.
Choosing An Online Bank Account
With the abundance of choice that is around currently it can be hard to choose the best online bank account for you. While it looks daunting, most of them are basically the same – they all offer high interest rates and all are only accessible via online or phone banking. Where they differ the most are the conditions they have attached to them – some have many, while others have none at all.
Be Careful Of Hidden Conditions
For my money, it is best to stay with those online accounts that contain few or no conditions, as they offer similar competitive rates combined with the peace of mind that comes with not having to worry about whether you have jumped through all their hoops.
The most common conditions are based around bonus interest rates, giving you a higher rate if you successfully meet them. But these can be confusing for a lot of people and generally if you don’t meet the conditions you forfeit the bonus interest for that month (usually earning you less than you would of earned with a bank account with no conditions).
If you love being an active participant in your money and you have the time and effort to devote to checking your accounts weekly then by all means look into the bank accounts that offer you bonus interest, but if you are like me and want a more minimal, hands-off approach to your money and investments, then have a look at the bank accounts below for a great selection from some of the most well-known Australian banks.
Australian Bank Offerings for Online Accounts
Commonwealth Bank
Australia’s largest bank offers up only a single online banking account, called NetBank Saver. Like most online saving accounts it has no fees but needs to be linked to a transaction account.
Westpac Bank
Called the Westpac eSaver, this online savings account must be linked to a regular transaction account but has no fees itself.
ANZ Bank
ANZ has their Online Saver account which like most saving accounts attracts no fees, offers a good interest rate but needs to be tied to a transaction account.
NAB
iSaver is NAB’s online savings account and like most other banks, is free of fees but must be linked to a transaction account.
BankWest
BankWest has an online saving account, called TeleNet Saver and is much like most other bank’s offerings – no fees and must be linked to a regular transaction account.
Suncorp Bank
Suncorp Bank has a few options when it comes to online savings accounts. The first is called a Sub-Account and is attached to your transaction account, is free and offers a competitive interest rate.
The second is called eOptions and is a completely free account which unlike most online savings accounts does not need to be attached to a transaction account, which means it is completely free of any account-keeping fees.
The third option for Suncorp customers is what is called flexiRates. A flexiRate is like a term deposit in that you set a period of time that you lock away your money and are rewarded with a higher interest rate. The advantage of this over a term deposit is that you can choose how long you lock it away. These rates are available with both the eOptions and Sub-Accounts.
St George Bank
Direct Saver is St George’s online savings account and has no account-keeping fees associated with it. What’s more is that you don’t need to have any other St George account attached to it.
Who Is The Best?
Looking at basic interest rates, Suncorp offers the highest rate at 4.75% (as of writing), and also offers the use of flexiRates to earn an even better rate.
If you want to include the bonus rate, then Bankwest wins it at 6.15% for the first 12 months. On the surface this looks pretty good, but you need to link it to a regular transaction account which will cost you a monthly account-keeping fee, and Bankwest seems to have a lot of hidden charges if you do a lot of banking which you may want to look into before signing up.
For a totally fee-free option, Suncorp has their eOptions account with the highest rate of interest and you don’t need to link it to one of their transaction accounts.
NOTE: Suncorp has also recently introduced a new account called the Everyday Basics account which is an everyday transaction account that has no account-keeping fee and gives you access to everything that other transaction accounts do.
So for total account keeping fee-free banking, Suncorp seems to be leading the way.
Do you know of any other great online savings accounts?
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Author Info
This article was written by Russ – the founder of MonoMoney.com and total geek. Feel free to contact him via this website and let him know how well he is doing. Or just leave a comment below.
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{ 2 comments… read them below or add one }
The best rates available are in the online only banks. Ubank offering a market leading base rate of 6.01% and offer a bonus of 0.5% if you set up a regular savings plan of at least $200.
When it comes to savings while chasing rates can earn you a small amount of extra interest, convenience can often result in better savings results. You are more likely to put away that extra $50 dollars a week if you can perform the transaction while your doing the rest of your banking online.
Two really great points, Adam.
I have a follow-up article dealing with online banks specifically, coming soon, but briefly, some of them are leading the way with rates. Although, your example of Ubank does highlight some of the conditions that are applied by banks to get that higher rate of interest that I touched on in the article.
Your second point is a good one as more and more people turn to the convenience of online banking, they will no doubt be tempted to top up savings while there if it is easy to do so.