An introductory interest rate is a higher interest rate offered on a savings account that’s only available for a couple of months. It’s a good practice to regularly compare your savings account options to ensure you’re always getting the highest rate.
What features should I look for when comparing savings accounts?
Introductory rate. Look for an account with a high introductory interest rate that lasts for a longer period of time.
Little or no fees. Some banks have monthly fees or will charge you if your account balance dips too low. Look for a fee-free account, especially if you can’t keep a high minimum balance.
The regular rate. After the introductory period is over, your account will drop down to the bank’s regular rate. Don’t get so caught up in flashy offers for new accounts that you choose one with a rock-bottom regular rate.
Signup bonuses. Some banks will offer a signup bonus of a set amount of money just for opening a new account.
What are the pros and cons of opening an introductory savings account?
You can finally start that savings plan. Receiving a signup bonus could be the motivation you’ve always needed to finally start saving.
You get more interest. The boost in interest offered as an introductory rate is a good incentive to put as much as you can into a savings account in the first few months.
It usually offers 24/7, flexible access. Unlike a Guaranteed Investment Certificate (GIC) or a savings bond, a savings account usually allows you to deposit and withdraw money regularly, so you’re safe against unexpected expenses. Keep in mind that most savings accounts have a maximum withdrawal limit, after which you’ll be charged per withdrawal.
There’s a low minimum balance. Unlike GICs and bonds, you can start your savings account with a low balance and add to it each month.
The introductory rate only lasts for a limited time. After the introductory period, the account will revert to a lower, standard variable rate.
You don’t usually get signup bonuses right away. Many banks require you to have your account open for a specified period of time before they give you your signup bonus. This prevents people from opening several accounts in one day just for the cash and then closing them the next day.
Easy access to your money makes it easy to spend. If you have trouble keeping your hands off your savings, a traditional savings account might not be the best option.
An introductory offer can be the motivational boost you need to start saving. When you’re ready to open an account, take advantage of any bonuses available — but make sure it’s an account that you’ll still want when the intro period ends.
Shirley Liu is Finder's global program manager. She was previously the publisher for banking and investments and has also written comparisons for energy, money transfers, Uber Eats and many other topics. Shirley has a Master of Commerce and a Bachelor of Media, Journalism and Communications from the University of New South Wales. She is passionate about helping people find the best deal for their needs.
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