Most banks offer smart-phone apps so you can transfer money from your online savings account to your linked transaction account on the go.

Beating up banks for charging high fees and paying low interest has become something of an Australian pastime but the truth is, most banks offer accounts that are:

  • easy to access (the only catch being that you need to have internet access and be comfortable interacting online – but these are becoming smaller and smaller obstacles for most people)
  • incur little or no fees, and
  • pay (relatively) high interest,
  • have no minimum opening or ongoing account balance requirements
  • do not restrict withdrawal or deposit amounts or frequency.

So how do they work?
Online savings accounts don’t offer ATMs, branch access, cheques, credit cards, debit cards or EFTPOS but that doesn’t matter because they are designed to be linked to an existing bank account so you don’t set up an online savings account instead of your normal account. You set it up to work with one: the linked account.

Opening an online savings account is easy. Most of the forms can be filled out online, and because you link the new account to an existing bank account, you don’t usually have to complete the 100-point ID check needed to open a bank account in Australia.

You then deposit or withdraw money, online, via the linked account. So to access your money you transfer it to your linked account and go about your business as you normally would.

And here we come to the one real drawback of online savings accounts.
Withdrawing money is a two-step process (first transfer the money to your transaction account, then do your withdrawal or payment). If your online savings account belongs to a different bank to your linked account, it can take a day or more to process the withdrawal, which can be inconvenient.

If this is very off-putting for you, investigate the online savings account offering from your existing bank. The rate might not be the highest available, but the transfer to your transaction account usually occurs with little or no delay.

What are your thoughts?
Are you convinced? Is an online savings account right for you? Is there anything else you’d like to know about everyday money management?

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