How does a savings account work?
A savings account lets you deposit money and earn interest, helping you save for future goals like a home deposit, holiday, an emergency fund or retirement. Different types of savings accounts may have different features. For example, some might give you the flexibility to deposit funds and withdraw money as needed, and other types of savings accounts let you accrue bonus interest for making regular deposits and no withdrawals.
Depending on your situation, you might also have the option to open a joint savings account, which is a great option for couples or two individuals working towards a shared saving goal.
Unlike a transaction account, a savings account isn’t linked to a debit card, so you’re less likely to make card transactions and spend the money in your account.
How many savings accounts should you have?
You can open as many savings accounts as you need with your bank. The number of accounts will depend on your personal situation and whether your bank has rules about account limits. There are certainly benefits to having more than one savings account.
You can separate your savings for different needs and goals, such as emergencies, travel, entertainment, etc. Bucketing your money makes it easy to manage and track your progress with those specific goals.
Having multiple accounts with one bank may also simplify your banking experience, as you can access all your accounts through the same online and mobile banking platform.
Different types of savings accounts
Savings account versus transaction account
Unlike a savings account whose primary purpose is helping you earn interest, a transaction account is used for everyday spending. With a transaction account, you can link a debit card to make purchases online and in-store, withdraw cash from ATMs, and set up direct debits for your regular expenses.
Learn more about how transaction accounts work. You can also compare our range of savings and transaction accounts to find the one that’s right for you.
Term deposit versus savings account
A term deposit is a type of savings account that lets you invest your funds for a specific term at a fixed rate. This means you agree to leave your money in the account for a certain amount of time (a term) that can range from 30 days to five years. For shorter term periods (less than 12 months), interest is typically paid when the term deposit reaches maturity, while interest may be paid more frequently (monthly, quarterly, half-yearly or annually) on longer term investments (greater than 12 months).
One of the benefits of a term deposit is that the money you invest is locked away for a fixed term, with a fixed interest rate (unless you give 31 days’ notice or provide notice of hardship) so you are guaranteed a certain amount of interest without fluctuations.
Whilst term deposits don’t have the flexibility and accessibility of a savings accounts, both may have their place in your financial plan. The best one for you depends on your savings goals, how soon you need to access your money, and how disciplined you are with your savings.
Learn more about different types of bank accounts so you can decide which is right for your money goals.
How to open a savings account
If you’re looking to open a savings account, here’s a quick checklist of things to consider:
NAB Reward Saver: This account is suitable for anyone looking to grow their savings. By making monthly deposits and no withdrawals, you’ll earn bonus interest on the balance of the account.
NAB iSaver: With this online savings account, you have the flexibility to make withdrawals using your linked NAB transaction account without affecting your interest rate. You’ll also receive a competitive introductory interest rate for the first four months.
Learn more about opening a bank account online. If you’re ready, get started by exploring our savings accounts.
Account options to consider
Explore our transaction and savings accounts to understand which best supports your financial goals.
NAB Reward Saver
Grow your savings faster with a higher interest rate, if you're a motivated saver.
NAB iSaver
Enjoy flexibility with your savings while still earning interest. Receive the fixed bonus margin for the first four months on your first new account for balances up to $20m.
Transaction accounts
Access your money with our everyday bank accounts with no monthly fees.
Budgeting and savings guides
Whether you’re saving for a house, or just want to get better at budgeting, we have some handy guides to help.
Money saving tips to reach your goals
Learn how to make your saving plans succeed with our simple money saving tips.
How to budget
Create a budget to help you meet your money goals.
Budgeting and saving
Learn how to budget. We can help you achieve your financial goal faster, whether it's for a deposit, travel or other.
Terms and Conditions
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The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.
Target Market Determinations for these products are available at nab.com.au/TMD.