Choosing a savings account that’s right for you

Between the banks, building societies and credit unions it’s difficult to know where to start in the search for the perfect savings account.

Investing 101 tells us to look at the rate of return or “savings rate” offered on these accounts and that seems as good a place as any to start. I’ve picked out a few of my top savings accounts that offer strong relative returns with a couple of the pros and cons outlined for each below.

RaboDirect High-Interest Savings Account (3.05% p.a. maximum variable rate for 4 months)

I’ve used the RaboDirect High-Interest Savings Account (HISA) myself in the past and found the return to be one of the best on the market, albeit for only for 4 months. The big plus is that there are no monthly deposit conditions on the HISA which allows for withdrawals while still picking up a handy 3.05% per annum.

The big drawback here is the 4-month timeframe, which is not uncommon with a lot of these HISAs that lure you in with strong headline interest rates. The standard variable rate on the RaboDirect account is 1.80% which sits in the middle of the pack, and I’d suggest the RaboDirect as part of a bigger rollover strategy.

AMP Saver Account (2.55% p.a. maximum variable rate for 4 months)

The AMP Saver Account could offer value for investors beyond just the 4 month period with a 2.10% p.a. standard variable rate. With no minimum opening deposit and no limits on withdrawals, the AMP Saver Account is a good option for those not looking to roll over their savings every 4-6 months to maximise returns.

UBank USaver (2.87% p.a. maximum variable rate)

NAB’s digital bank offers a maximum variable rate of 2.87% on its USaver account with a standard variable rate of 1.81%. Unlike the RaboDirect HISA, the 2.87% just relies on regular deposits ($200 per month) and ensuring the balance does not exceed $200,000.

Choosing the right account

These three are just a few good places to start in the Australian banking landscape, but ultimately each investor will need to make up their own mind about where to park their hard-earned cash. It’s important to always read the fine-print and particularly any introductory rates, withdrawal/deposit requirements or restrictions, and account closure details.

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Motley Fool contributor Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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