Before the Internet, term deposits were the bees nees of cash. However, these days your top-earning online savings accounts can match the best returns offered on term deposits. So if don’t mind using the Internet to do your banking, then online savings accounts are an attractive option since they allow almost ready access to your cash, are usually free from bank fees, usually have no minimum balance and offer extremely attractive rates.

The biggest downside of online savings accounts is that you still need a transaction account from which to move your money in and out. That’s because online savings accounts generally don’t offer branch, ATM or EFTPOS access. Rather, to withdraw and deposit funds, you transfer the funds between a transaction account and your online savings account via telephone or Internet banking. The process can take up to two days if your online savings account and transaction account are with different financial institutions. Clearly, it’s instantaneous if you organise both accounts with the one institution.

For the spend-hearty having this extra step between your account balance and purchases can come in handy. For those who don’t plan in advance and can find themselves low on cash, an online savings account mightn’t be a good option (unless it’s connected to your transaction account at the same institution, often called “all in one accounts”).