Banking on cyber space

Old-fashioned savings accounts with measly returns may as well be mothballed as the future is being fashioned by the Internet. Online banking offers at-call accounts with high interest. Their providers can be generous as they have low overheads due to this form of “branchless banking”. And some providers are credit unions which don't have to produce high profits for shareholders, thereby freeing up capital for distribution to account holders.

The three largest institutions – AMP, ING and St George – pay a minimum of 4.75 per cent on a balance as low as $1, while Community First Credit Union's Easy Street Financial Services pays 5 per cent for balances of $999 or more, but no interest if the balance falls below this.

HSBC and Australian National Credit Union require balances of at least $2,000 before they pay interest. Members Equity pays 4.25 per cent on balances of $3,000 or more, but just 0.25 per cent if the balance falls below that. Members Australia Credit Union pays 4.6 per cent interest once an account balance reaches $5,000.

All institutions calculate interest daily and pay it monthly. AMP, HSBC, Members Australia, Members Equity, St George Bank and Australian National all offer access to deposits through ATMs, however an online transfer of funds may be needed before a withdrawal can be made.

While most providers say that no account-keeping fees are levied, charges can occur for transfers or ATM withdrawals, and government charges are automatically debited from the accounts.

See InfoChoice's Online Savings Accounts table