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Why Savings Accounts aren’t always the Bridesmaids when it comes to investing

Thinking about investing and chances are your thoughts will go straight to a term deposit. Problem is, if your circumstances or mind changes before the end of the term, you may stand to lose a significant portion of your hard earned interest. That’s where on-call savings accounts can offer a good alternative.

Savings accounts are traditionally thought to lag behind term deposits in rates of return, but offer flexibility and access to your money when you want it. But with savings account rates as high as 3.15%, there are some good options out there.

Canstar general manager, Jose George says

“With the flexibility to access your account, either to withdraw or invest, at any time; savings accounts are a great option for those who don’t want to immobilise their money by locking into a term investment.

“Savings accounts are also a great way to save for a big ticket item and they also give a better return than an everyday account for that emergency or rainy day fund you may want to have at your disposal.”

A better relationship with your money
Another benefit of a savings account is the financial behaviour it can encourage you to adopt.

Savings accounts tend not to be as accessible as an everyday account, and putting aside a regular, even relatively small amount will soon accumulate and get closer to savings goals, which in itself can feel like a pretty satisfying achievement.

What you should consider when looking for a savings account
It’s always pleasing for savers to see a good rate but, chances are, you will benefit from higher returns if you remember a few simple rules:

• Consider what you need from the account. If you are willing to go for a basic account with very little functionality (e.g. withdrawals and payments to different accounts or online banking), the flipside is you may be able to get a better interest rate.

• Shop Around. The saving market is a crowded one and the best deals are not always with the bigger banks. Click here for details.

• Check if the account requires a ‘minimum balance’. Watch out for this one. If the account requires a minimum balance, drop below it and you will stop earning interest.

• Check your provider’s fees, terms and conditions. Find out how the interest is calculated and paid, interest rate changes and fees charged (if any) for withdrawals or transfers.

Money on the go
One challenge that many people have when trying to save is the ease at which we can spend money!

However, with innovations such as Westpac’s CashNav, consumers’ can have real time visual on what they are doing with their money giving people the opportunity to change their spending and/or savings habits if they so desire.

George went on to say:
“Innovation is really pushing the boundaries is the transactional banking space and it’s becoming the norm to be able to have real time insights into what and how you’re spending your money.

“To balance spending, savings accounts are often used as a ‘bolt on’ to transactional banking and New Zealand consumers are spoilt for choice on both fronts. Canstar recently surveyed 53 different saving and transaction accounts from 11 separate providers offering rates of anywhere between 0.1 and 3.15%, depending on how much you had to invest. It’s definitely not a one-size-fits-all so researching what you want is paramount to getting the best arrangement for you.”

The top rated providers

Provider	Category	Award
• Heartland Bank – Direct Call Account • Heartland Bank – Saver • NZCU Baywide – Online Saver	Flexible Saver	Canstar Outstanding Value Savings Account
• Kiwibank – Notice Saver – 90 Day • SBS Bank – Incentive Saver	Regular Saver	Canstar Outstanding Value Savings Account
• ASB – Streamline Account • Westpac – Electronic Account • Westpac – Electronic Account with Airpoints Debit MasterCard	Electronic Transactor	Canstar Outstanding Value Savings Account
• ANZ – Freedom Account • Kiwibank – Free Up Account • Westpac – Electronic Account with Airpoints Debit MasterCard	Full Service Transactor	Canstar Outstanding Value Savings Account

For further information and a full list of Canstar Five Star Ratings for savings and transaction accounts, 2017, please visit the Canstar website.

ENDS

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