Which type of account is right for you?

You may have an everyday bank account for transactions, but if you've established a regular saving habit, the next most important consideration is where to keep your savings while you're working towards your financial goals. Financial institutions offer a wide range of different accounts to help you reach your savings targets. There's bound to be one that's right for your needs.

To choose an account that suits your needs, speak to someone at your financial institution and they will help you. It's important to get to know what the account options are and their pros and cons. Special rules often apply when you are under 18 years of age. The important features to check out are:

• How you can access your money. Can you use all forms of electronic banking (ATMs – Automated Teller Machines, phone banking, Internet banking and EFTPOS – Electronic Funds Transfer at Point Of Sale) to save on transaction fees?
• Whether the account has any special features (like bonus interest or reward programs).
• Whether the account has a minimum required balance. Also, some accounts don't pay interest unless your balance is above a certain level.
• How much you will have to pay in fees and charges. You will be provided with a copy of the schedule of fees and charges to check how you can access your money and minimise fees. Internet and IVR (Interactive Voice Response) phone banking transaction fees are generally lower. If you are a student, ask if they offer accounts with special discounts or features for students – it could save you money!
• The interest rate on the account. Interest rates may vary depending on how much you have in your account.

Below is an overview of some of the types of accounts available.

Transaction accounts

Transaction accounts are for your day-to-day banking needs, whether it's somewhere to deposit your pay or an account to use when paying bills or doing some shopping. Transaction accounts can come with a debit card and/or a cheque book, in which case you can pay for goods and services by writing cheques. These accounts are sometimes referred to as 'cheque accounts' (it’s important to note that, given the popularity of modern electronic payment options, many businesses no longer accept cheques).

Savings accounts

These accounts can help you to save regularly, particularly if you have had trouble saving in the past. They may have special features that encourage you to save, such as bonus interest if you make a deposit and no withdrawals over a specified period.

Investment accounts

If you're serious about saving, or have a lump sum to ‘park’ for a short term, consider a cash management or other investment account. In return for higher interest rates, you need a minimum balance to open such an account. Sometimes access to your money is also restricted. Shop around and know the terms and conditions of your account to help minimise fees. Be aware that age restrictions or special rules may apply.

How to open a bank account.