When it comes to personal banking, there are quite a few options to consider when it comes to storing and using your money.

If you’re looking for a bank account but aren’t sure whether to get an everyday (transaction) account, a savings account, or both, we’ve put together the following basics to help you better understand these two account types and find one that suits your needs.

What is a Savings Account?

This type of bank account is predominately used to grow your savings faster i.e. the money you deposit accrues interest.

Savings accounts are a great way to save towards a goal, as they generally offer a higher interest rate than basic transaction accounts. Some also make it harder for you to access your money to encourage good savings behaviour, so you are not tempted to dip into the jar.

What to look out for

When choosing a savings account, here are some things you should look out for before applying:

The interest rate and how it’s paid

How regularly you receive the interest and if any honeymoon or introductory interest rate applies. For example, the higher interest rate might only apply for the first 3 months, after that the standard interest rate applies.

Fees that you might be charged

This may include monthly account-keeping fees, and transaction fees such as EFTPOS, electronic payments, ATM withdrawal.

Deposit amounts

If there are any minimum or maximum deposit amounts that apply. Some accounts may require you deposit a minimum amount each month to earn bonus interest on your account balance.

Linked accounts

Whether a linked account is required, such as a transaction account from the same provider.

 What is a Transaction Account?

This type of account may also be called an Everyday Account, which essentially means an account used to manage your finances, from receiving payments, taking out cash and paying bills.

 Transaction accounts are useful for mostly everyone and there are many ways you can utilise this account. One of the common usages is depositing your income and withdrawing money to spend on the things you need by accessing the funds through a debit card.

What to look out for

When choosing a transaction account, here are some things you should look out for before applying:

The interest rate

Most transaction accounts offer no or very low interest rates on the balance. That’s why many providers offer linked savings accounts to earn interest on any additional funds that you don’t need on an everyday basis.

Accessibility

Take a look at your spending habits to determine how you need to access your money. Do you get cash out often and need easy access to ATMs? Are you mostly using internet banking or an app to manage your funds?

Deposit amounts

If there are any minimum or maximum deposit amounts that apply.

Fees that you might be charged for

This may include monthly account-keeping fees, and transaction fees such as EFTPOS, electronic payments, ATM withdrawal.

Savvy Tip: If you have both savings and transaction accounts, keep the money you need to cover your everyday costs in your transaction account and allocate the rest in your savings account and watch your savings grow with the interests accrued.

You can check out a variety of different savings & transaction accounts at Credit Savvy, so you can choose the right one for your goals and everyday needs.

Remember to do your research and choose a product based on your financial situation before signing up to any type of account.