Compare online savings accounts

How does an online savings account work?

Like the name suggests, an online savings account is a bank account operated entirely online, designed to let your savings grow. You’ll usually get higher interest rates than regular transaction accounts because it’s focused on boosting your savings.

How is an online savings account different from a transaction account?

Transaction accounts are for everyday banking — think salary, bills, shopping, and ATMs. They come with various features and, as such, different fees. But they’re generally not great for earning interest.

Online savings accounts, however, are like digital piggy banks for growing your savings. Because they’re operated entirely online, they have fewer overhead costs, allowing them to offer higher interest rates than transaction accounts. This means the money you deposit into a savings account will grow faster.

They’re geared towards regular savings and can restrict withdrawals to help you resist the temptation to spend.

What are the features of an online savings account?

• Online savings accounts usually reward you with higher interest rates than transaction accounts. That’s because they’re designed to help you grow your money, not just store it. So, while your savings sit there, they work hard, earning you more money.
• Most online savings accounts come with zero monthly account fees. That’s more money staying in your pocket or, better yet, earning you interest in your account.
• To help you resist the temptation to dip into your savings, online savings accounts often have restrictions on withdrawals. There might be limits on how many withdrawals you can make per month or fees if you withdraw too often. It’s like a gentle nudge to keep your savings on track.
• Online savings accounts often offer features to help you save regularly. This might be an option to set up automatic transfers from your transaction account or round-up features that top up your savings with the change from your transactions.

What fees apply?

Online savings accounts generally have minimal fees associated with them. You might pay excessive withdrawal fees and, in rare cases, electronic transfer fees. These accounts don’t usually charge monthly service fees.

Can I make a withdrawal?

Yes, but remember, online savings accounts are designed to help you save. While you can make withdrawals, these are often limited, and excessive withdrawals can lead to fees or a drop in your interest rate.

Tips to compare: What to look for in an online savings account

When considering an online savings account, you should look for:

Competitive interest rate: Interest rates are higher than transaction accounts, but compare online savings accounts to see how competitive the rate is.

Monthly deposit requirement: Can you meet it without stretching your finances too thin? If not, an account with a more manageable deposit condition might be a better fit.

Banking consistency: Does your current bank offer a competitive online savings account? If yes, it might be easier to keep your accounts together. Just ensure it’s the best deal for you.

Introductory rates: If the account’s high rate is just for an intro period, like the first 4-5 months, are you ready to switch accounts when the honeymoon phase ends?

Withdrawal conditions: Life’s unpredictable, and you may need to dip into your savings. Will making a withdrawal cause your interest to take a hit that month?