According to recent survey results over four out of five internet users no use online banking. While online banking provided added convenience to consumers by providing 24/7 access to account details and funds it has also allowed new players to enter the market without the requirement for a large and expensive branch network. By saving money on the branch network and other overheads, online savings accounts offer benefits to the consumer in the form of lower banking fees and higher interest rates than traditional bank accounts with full branch service.



When selecting an online savings account, there is no one size fits all product. Your financial behaviour is a key factor in choosing an online savings account- especially in as far as transacting volume and saving patterns are concerned.

Here are some of the things to look for when comparing online savings accounts.

Interest Rates: Check the interest rates payable on the account and compare them to others on the market to ensure they are competitive. Make sure you know if the interest rate is a standard variable rate or simply an introductory rate for a fixed period, e.g. 6% for 12 months. Check how interest is calculated and paid. It's most common for interest to be calculated on a daily based and paid into your account once per month.

Minimum Deposit: Look out for the minimum deposit required when opening an account. Most online saving accounts with high interest rates don't require a minimum deposit, however some require an initial deposit such as $1,000 when opening the account.

Account Fees: Check whether there is any fees payable on the account. These may be in the form of a monthly account fee or usage related fees such as charges for making a transaction or contacting customer services via phone instead of online.

Interest Penalties: There may be indirect account fees payable too. Look out for online saving accounts that charge an interest penalty when withdrawing money from your account. One indirect charge made by some banks is to penalize you by paying no interest for the months in which any funds are withdrawn from the account.

Read beyond the headlines: Ensure that you understand the full details of the online savings account offer that you see. A promotion may advertise 'earn up to 6% interest'. In this example you would want to make sure all your savings were earning the full 6% interest rate. Some banks have a range of interest rates that apply depending on how much money you have in the account. Ideally every dollar should be earning the same high interest rate.

Accessing your money: Before applying for an account, think about how you may need to access the money and how quickly you'd need to access it. Many online banks work by linking your savings account to your normal everyday bank account. This is cost effective and often fee free but may take a couple of days for the money to get to your bank account. Some online banks provide an ATM card providing instant access to your funds.

Build your savings faster: It's easier to set up an online savings account and then neglect to add money on a regular basis. When applying for an account you should think about setting up a regular direct debit from your everyday bank account. By making a regular deposit each month you'll soon find your savings and interest earnings starting to add up.

The Good News: The good news is that many of the online saving account offers on the market are very competitive and you will find a range of offers with high interest rates, no minimum balance requirements and no fees or penalties. Make sure you compare the variety of high interest online savings accounts on the market before making your application online.