Different types of savings accounts

Savings accounts feature higher rates of interest compared to other types of bank accounts. This is an incentive to encourage customers to make deposits and keep their money there for a long period of time in order to take advantage of the interest earnings.

Compared to a current account, a savings account will normally have certain limitations on how you access your funds. Banks offer a number of different types of savings accounts, with different kinds of benefits designed to encourage long-term deposits.

Usually there are no minimum or maximum limits to the amount you can deposit. One exception to this are high-interest savings accounts. These type of accounts require a certain minimum deposit for you to avail of them.

• General or On-call Savings Account

Most savings accounts fall under this category. This is essentially a basic account attached to your current account. Funds are easily transferred between both accounts. Usually the only restriction is that you cannot directly withdraw from your savings account with a debit card, nor can you draw from it with a cheque.

• High Interest

The benefit of a high interest savings account is the higher interest earnings compared to a general savings account. However, you may have to give up any kind of immediate access to the money you put into the account. Generally you need to give advance notice before making a withdrawal, otherwise a service fee will be charged to the transaction.
As an incentive to depositors, banks normally offer higher interest payments the more money is placed into this type of account.

• Money Market Accounts

Money market accounts are a special kind of savings account that earn a fixed rate of interest over a set period of time. A large deposit is normally required in order to open a money market account, the minimum balance well above the amount required by basic savings accounts.

There are two common types of money market accounts. These are fixed term and notice accounts:

Fixed term account
Both the term of the deposit and the amount of interest paid are fixed. Inherently less investment risk is involved but access to the money deposited is usually restricted until the term of the deposit is finished.

Notice account
Potentially high interest earnings as fixed term accounts but actual interest rates are variable during the term of the deposit. Possible interest earnings also depend on the terms arranged for withdrawals before the term of the deposit is done.

• Online-only

Online-only accounts are generally the same as traditional savings accounts, except that the service fees and charges are lower because all transactions are accomplished on-line, requiring less overhead cost for the bank

• Children’s Accounts

Accounts specifically designed for children, these have touches like simple language used in all documents, and often feature bright and colourful savings books, stickers and other items designed with children in mind.

Children’s accounts allow the option of having more features added in the future. Solo access, for example, lets young people use services similar to standard debit card services at certain establishments.