Different types of bank accounts

Both accounts have specific purposes and features, and allow you to keep your money in a safe place. Understanding what you'll use your account for can help you choose the right one.

A transaction account is the most common type of bank account in Australia. It's used for daily expenses, salary deposits and paying bills. A transaction account usually comes with a debit card for shopping in-store, online and overseas.

A checking account (or chequing) is another name for a transaction account in the US and Canada. In the UK, transaction accounts are called current accounts. 

A savings account allows you to set money aside to make it grow faster for longer-term goals. This account might not come with a debit card because it's primarily for saving money. Unlike other investments, it’s usually pretty easy to access your money in a savings account when you need it. 

A term deposit offers you a fixed interest rate to lock your money away for a set amount of time (called a 'term'). There's usually a minimum term of investment – from 1 month to 5 years – and a minimum opening deposit. 

You'll need to give 31 days' notice to take your money out of a term deposit. If you withdraw your money before the end of your term, you may be charged an early withdrawal fee and the interest earned will also be reduced.

A savings account will earn you higher interest than what you'd get on a transaction account. This is designed to encourage you to grow your money. 

There may be restrictions on your savings account when it comes to making withdrawals, or the deposit required to earn bonus interest. 

Another difference is that transaction accounts usually come with a debit card to access funds, and savings accounts do not.

Find out more: Tips for banking in Australia