Choosing a savings account really depends on the purpose and goals you are working towards. If you are looking for the best way to save money for Christmas for example, then a Christmas Club account might be ideal for you. Or, you may want to reward yourself by earning interest on your savings. If this is the case a high interest account like our Reward Saver is the way to go.
In this post we look at some of the benefits of savings account options based on your savings plan.
Define Your Savings Goal
Have a think about your savings goals - what are you looking to achieve? This will help you decide what type of savings account you need. There are three basic savings accounts that are commonly used:
Everyday transaction accounts
High interest savings accounts
When defining your savings goal, it will help to make a list of what is important to you – it might be saving for a holiday, new car, or for your family’s future. It is also worth thinking about the savings plan term - is it a short term savings or long term savings plan?
It is best to use a term deposit to save for long term savings plans, as you can assume you won’t need the money straight away. Reward savers and other high interest savings with flexible access options may be better for short term savings goals.
Consider Your Budgets & Spending Habits
In order for any savings plan to work to achieve your goals you do need to consider your budgets and spending habits. It is always a good idea to review your spending, subscriptions and any fees you’re paying. It takes time to create new habits, so start by assessing your expenditure and where you can use some of this to save money.
Look for ways to cut back and make the money you earn go even further. Priority should always be given to paying off debts, then saving, then other expenses where possible.
To give you motivation, use a savings calculator to see how much interest you could earn for your short term and long term savings plans.
Note: you’ll need to adjust the interest rate slider to what is applicable.
What Are The Benefits?
After defining your savings plan goals you may consider the savings account options below. These can help you find the right balance based on your goals, term of savings plan and budgets.
An everyday transaction account – the benefit of these is they usually have no access restrictions, and you can link Visa debit cards to access your money. Everyday transaction accounts are the place to have your pay deposited into, and any other income such as government payments or rental income.
A high interest savings account – a pro saving tip is to put the same amount of money away into a savings account each week or fortnight. The benefit of these savings accounts is that bonus or reward interest is often forfeited, if you withdraw money. This encourages you to put money away and not withdraw it.
A term deposit – the third type of popular savings account is actually a term deposit. Money is ‘locked away’ for a specified term. Usually anywhere between 1 month and 3 years (depending on how much you want to deposit) The benefit of a term deposit is that interest is paid monthly or at maturity (at the end of your term). You also have a couple of options to reinvest your original amount with interest earnt, or withdraw the funds.
There is a lot to consider when choosing a savings account to maximise your savings efforts. If you’re looking for support with choosing the savings account for your needs, get in touch with us today. We’re here to make the process easy and provide a great experience.
The content in this article has been prepared by Horizon Bank for general information only and it is not intended to be professional advice. It does not take into account your objectives, financial situation or needs. You should seek your own legal, accounting, financial or other professional advice where appropriate, and consider the relevant Product Disclosure Statement and Terms and Conditions before deciding whether to acquire any products or services offered by Horizon Bank and/or its affiliated partners. We do not recommend any third party products or services referred to in this article unless otherwise stated and we are not liable in relation to them. Any links to third party websites are for your information and we do not endorse any content on those sites. Horizon Credit Union Ltd ABN 66 087 650 173 AFSL and Australian Credit Licence Number 240573 trading as Horizon Bank.