December 1999 Volume 80 Number 12 "serving the protectors"
Police Credit Union

Smart Savings - Types of Accounts

he more I earn, the more I spend!”

If this sounds familiar to you, you are probably indicative of the majority of Australians today.

In order to save, it’s best to determine the type of account that’s most manageable for you.

Most of us would have a day-to-day savings account accessed by some form of plastic card, and possibly a cheque book.

This is probably not the ideal account to establish as your primary savings account as it is too easily accessed, and it would be hard to maintain a consistent savings pattern.

There are many types of savings accounts. For example, if your goal is to put away money each fortnight, so that by Christmas your expenditure on gifts is minimal, a Christmas club account is the ideal solution. This type of account encourages regular weekly or fortnightly deposits, and generally restricts the period of withdrawals to between November and January each year inclusive. In addition, the temptation to pilfer from these funds is tempered by the fact that penalties apply for withdrawals made at any other stage during the year.

If you have a set amount to save, for example you may be contemplating an overseas holiday, or purchasing a home, a bonus saver account may prove the best solution.

Usually a minimum investment of $500 will get you started, and with a minimum deposit of $100 per month, a bonus saver account can pay an additional 3%p.a. on your savings. As a deterrent, the 3%p.a. bonus would not apply if you made any withdrawals during the month.

Alternatively, if you have already saved your nest egg, and do not intend to utilize the funds for some time, a term deposit may be worthy of consideration. A term deposit offers a fixed rate of interest for a fixed term, and interest is either paid at maturity or, depending on the product, at monthly intervals.

These days financial institutions offer direct payroll credits to nominated accounts. So, before you spend all of your wages, make sure to allocate a percentage of your income each pay period to go directly to a savings account. At least then you will see a reward at the end of the day for your labours.

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