• Choosing the right savings account
• Finding the right account

Choosing the right savings account

A savings plan will put you in the driver's seat and in control of your money. You can make your money work hard to allow you to save for long term goals like a car or an overseas trip, even Christmas presents.

Most financial institutions offer savings accounts and term deposits.

Term deposits are an attractive option for members looking for a stable and sensible way of investing their funds. Term deposits generally ensure that the original funds invested are returned with interest.

Generally, access to your savings in a term deposit can be limited. Generally funds can only be accessed or added to when the term deposit matures.

If you require more flexibility, you can opt for a savings account that offers a high level of interest.

Some financial institutions offer transaction accounts with a high interest level payable on savings. It's all about working out what account is best for you.

When shopping around for an account for your savings ask yourself a few questions:

• Do you want limited or easy access to your savings (to limit the temptation to spend)?
• Do you want a certain amount deducted from your pay electronically and put into a savings account? If so, can the account you choose do this?
• How often do you want to make deposits to your savings plan?
• How flexible do you want your savings plan to be?
• Is a term deposit better for you?
• Compare the fees and charges payable on your account.
• Compare interest rates on offer.

Your credit union can assist you in finding an account that best suits your needs.

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Finding the right account

Deciding where to keep you money after you've retired is a critical consideration and there's no right or wrong answer. Fortunately, there are several options to choose from so there's bound to be one that's right for your needs.

Financial institutions offer a wide range of different accounts designed specifically for retirees and pensioners. Many of these accounts have special features and interest rates so shop around until you find the one that meets your own needs. Don't be afraid to ask lots of questions!

Helping you save	The fine print
Savings accounts	Great for day-to-day banking because you have immediate access to your money. Most offer ATM, debit and EFTPOS card convenience but in exchange, usually offer modest interest rates so its best to keep only the minimum amount of cash in them to meet your needs, holding your serious savings in a higher interest bearing cash management or term deposit account. Personal cheque books and direct debits are often available and you may even be able to apply for an overdraft on these accounts. Note that accounts with cheque books attract much higher government charges. This Bank Accounts Debit (BAD) tax is charged on all withdrawals from chequing account.
Pension accounts	Usually provide at call access to your money. Special, low interest rates may apply to accountholders whose pension or allowance is subject to government deeming rules. Shop around to find the best account to suit your needs.
All-in-one accounts	All-in-one accounts can make life simple because they can meet most of your banking and payment needs. Allow ATM, EFTPOS and debit card access to your account. Can have credit cards and chequing facilities linked. Can have an overdraft facility. Can be linked to your mortgage in some circumstances.
Cash management accounts	If you're serious about saving, cash management accounts are worth considering. They offer higher interest rates but may have minimum balance requirements you must meet to get the extra benefits. In some cases access to your money may also be restricted. Don't just compare interest rates, also compare the Management Expense Ratio (MER) of each trust and the level of service you receive in return for these fees. Shop around and know the terms and conditions of your account to avoid paying unnecessary fees.
Special purpose savings accounts e.g. Christmas Club	These accounts offer special incentives to save and are designed to help you meet specific savings goals. Christmas Club accounts may pay a bonus interest rate if you maintain a regular savings pattern until the end of the year. Other accounts might offer monthly interest bonuses if no withdrawals are made that month.
Term deposits	If you have a larger sum of money you don't need to touch for a while consider a term deposit account. They offer higher interest rates fixed for the term of the deposit. You can't make withdrawals until the end of the term, which can be anything from 30 days to five years. Your money works harder and is out of temptation's reach.
Salary accounts	An excellent way to turn your mortgage into a savings account. Your entire salary is paid directly into your mortgage, reducing the amount you owe immediately. Living expenses are put on a credit card and disbursements from your mortgage can be made to pay these and other bills when they are due. In the meantime, your salary sits on your mortgage, which can cut years and thousands of dollars off your loan.
Mortgage offset accounts	A great way to earn extra interest and reduce your mortgage faster. Interest earned on your savings automatically goes to your mortgage, so your money effectively earns up to the same interest rate as your mortgage.
Superannuation	Superannuation funds and Retirement Savings Accounts (RSAs) are popular ways of saving for your future. If you're on a regular, full-time wage you can automatically have some of your pay deposited into these accounts. Money cannot be accessed until you retire.
Mutual funds or unit trusts	Savings from small investors are pooled together to tap into share, property and fixed interest markets. Funds are invested by professional investment managers, giving small investors access to diversified portfolios they may otherwise not be able to enter. Can offer much higher returns than savings accounts but there are risks involved and no guaranteed profits. Unit trust fund managers are answerable to independent trustees whose job it is to ensure their actions are in the investors' best interests. Note: Carefully read the prospectus before investing your money. Be aware of management and exit fees, the level of risk you may be exposing yourself to, tax implications and the duration of your investment.

Tip
Learn how to use electronic banking services such as automatic teller machines, EFTPOS, telephone and Internet banking. Transaction fees are usually much lower than for face-to-face services, so you will save money by using them! Ask your financial institution for help if you are not sure how to use their electronic banking services.