High Interest Online Savings Accounts

High interest online savings accounts are a newer option available to Australians looking to save what they have, earn as much as possible, and avoid paying high account fees – all without giving up freedom over when you can use your own money.

What Are High Interest Online Savings Accounts?

High interest online savings accounts operate similarly to a normal savings account through your local bank branch. The biggest difference is that the accounts are managed entirely online. They can be run by banks, or other types of companies and institutions, and generally pay higher interest rates than traditional savings accounts.

Benefits of High Interest Online Savings Accounts

“Isn’t it risky to trust my money to an online account?” you might ask. “Why should I do it?” Online savings accounts offer several benefits that can make them worth your consideration, including:

• Higher interest rates than traditional savings accounts
  
• More freedom over when you can withdraw funds when compared to fixed-term deposits
  
• Fewer (or even no) account fees like many bank branch savings accounts
  
• Ability to tie the accounts to other bank accounts for easy fund transfers
  
• Availability at all savings levels (some accounts have no minimum deposits)

Drawbacks of High Interest Online Savings Accounts

Despite their benefits of earning you more money without denying you access to your money, high interest online savings accounts also have their downsides:

• No access to bank tellers (if you need the personal attention of a bank branch, a high interest online savings account may not be right for you)
  
• Deposits aren’t immediate (you either have to transfer funds from your primary transaction account, or you’ll have to mail cheques to be deposited)
  
• No access to ATMs (you don’t have to wait for weeks or months to access your funds, like with a fixed-term deposit, but you may have to wait a few days for funds to be transferred from your online account to your primary account for spending or withdrawals – if you’re fighting the urge to spend too much money though, this may actually be a benefit for you)
  
• More research needed (since online savings accounts aren’t always run by banks, you’ll need to thoroughly research the company that would be holding your savings to determine whether or not you want to trust them with your money)

Keeping all of these things in mind, it’s time to decide if you’re ready to take back control over your savings and your ability to earn more interest through an online savings account.

Article correct at its author date: August 2008. Copyright Virtual Office Space, Any unauthorised reproduction of this article will be prosecuted to the full extent of the law. Credit Cards Australia.

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