Investors should be aware of misleading conditions attached to some of the 70 online cash accounts available on the market, ratings agency Cannex has advised.
With cash being an attractive alternative to shares Cannex said investors should be wary that some interest rates on accounts may not be the money spinner they first appear.
"You can get good returns but you must read between the lines," Cannex financial analyst Jeremy Ooi said.
"Some are merely introductory rates for the first year, or even less, then they revert back to a lower base rate. You must read the small print."
Withdrawal timeframes are another area where penalties may occur.
"Some online savings accounts only pay the advertised interest rate if no withdrawals are made for a specified period," Ooi said.
"These advertised interest rates are more like bonus rates payable provided there are no withdrawals during the period. This is particularly an issue with the older bonus saver types of products as opposed to online savings accounts.
"Parking your cash online as a way of riding out the volatility of the share market can be a sound idea, as long as you are mindful of the pitfalls."
Large global institutions such as Citi, HSBC, RaboPlus and Bank West-owners HBOS have aggressively marketed savings accounts to investors.
