Ross and Audrey Power have been with the same bank for decades. They're happy with the service and are in no hurry to change from the two accounts they have a pensioner account and a cheque account.

The couple, who are 83 and 79 respectively and live in the Sydney suburb of Kingsgrove, are in some ways not the typical older customer of a bank. They rarely go inside a branch to use a teller, preferring to withdraw money from ATMs (only if it's inside a branch) and they use Eftpos machines whenever they need to. They have also set up direct payments for utility bills that automatically come out of their account.

However, in other ways they are very much like those aged 70 and over who the ANZ Survey Of Adult Financial Literacy In Australia 2008 has found are among the lowest users of the internet.

"We are very hesitant because we think we wouldn't cope too well," Audrey says. "We hear these terrible stories on the television about people getting into strife online and with home banking. Ross and I are using the system the way we've got it; it suits us, we're not frightened with that, we just get our money out once a week and we feel safe."

The survey found that the popularity of internet banking has shot up in the past six years, with the number of bank customers almost doubling to just over 50 per cent. However, older bank customers make up a very small percentage of those users. Just 5 per cent of women over 70 use it and about 20 per cent of men in the same age group. This compares with more than two-thirds of bank customers under 45 who do their banking online.

The National Information Centre on Retirement Investments' Basil La Brooy says older people are disadvantaged financially by not banking online because fees are often lower for online accounts and interest rates higher.

While the average interest rate for online savings accounts is 3.35 per cent, customers can find offers above 4 per cent. These accounts are generally fee-free but need to be linked to a transaction account, which may incur fees.

The head of the Australian Bankers' Association, David Bell, says there is a range of competitive savings accounts at the moment because "banks are fiercely competing for deposits". There are also accounts, such as deeming accounts, specifically for older people and those looking for free banking. He says for customers with larger amounts, term deposits offer high interest (up to 6 per cent for three-year terms) and a fixed income stream.

Many standard savings accounts offer bonus rates that take the total annual interest rate to 3 per cent and as high as 4.3 per cent. But to get this bonus rate most of these accounts require at least one deposit and no withdrawals a month, otherwise the interest rates plummet, in some cases to zero. La Brooy says these conditions are almost impossible for retirees to stick to.

Passbook accounts have traditionally been popular with older people because they offer over-the-counter services and a transaction booklet. But banks and credit unions have all but stopped offering these accounts to new customers (but will service existing passbook holders).

La Brooy says the most popular account for older people is the deeming account. Deeming is the method the Federal Government uses to calculate income from "financial assets", including bank accounts, and assumes any money in these assets is earning set (or deemed) rates of interest, regardless of the actual rate (the deeming rates are 2 per cent for the first $41,000 earned and 3 per cent over that). The income from this affects pension payments.

Deeming accounts are ones that pay the deemed rates of interest (most accounts need at least $2000 to get the lower deeming rate of 2 per cent; the higher rate generally kicks in at over $41,000), have no or very low fees and a number of (or unlimited) allowable monthly transactions. They are usually restricted to people on the age or other pension and-or those over 55.

A financial analyst with Canstar Cannex, Peter Arnold, says deeming accounts "are a good way to earn some interest while still maintaining transaction capability", although online accounts offer higher rates. Different rates for different tiers in deeming accounts also "brings the interest rate down", he says.

The head of the NSW Council on the Ageing (COTA), Jon Bisset, says older people are either good at knowing what they need, or they stick with the same banking product they've had for years.

"That's part of the issue," he says. "The best way to find out [the best bank account] is by going online.

"There could be a lot of older people out there paying a lot more fees than they may need to and probably don't understand how much they could be saving by doing it on the internet."

However, the highest rates on the net are often promotional rates and don't last very long, which means seniors are better off finding a good "base" rate instead (see table, top right).

The chief executive of National Seniors Australia, Michael O'Neill, says the financial downturn is forcing more older people into internet banking. "A lot of it comes from the financial pressure that older Australians have been under for the last couple of years," he says. "They're looking for every opportunity to increase the return on their savings."

He says banks "have a role in treating people as equally as possible and clearly there would be opportunities for them to do more for those folk who don't have the capacity or the access for that kind of technology. They clearly don't do that at the moment."

About 18 months ago Marjorie Phillips*, 80, tried online banking. Unlike the Powers, she uses the internet to send emails and search the web, although she admits she lacks confidence.

Initially she wanted it to check her account balance and transaction history. However, she wasn't able to access her account online because she was not able to type in her password quickly enough before the program "timed out".

"I have arthritis in my fingers but as well as that I think it was apprehension," she says. "Those things make it difficult."

A COTA spokeswoman says banks and credit unions need to consider the needs of older people more.

"Apart from dispelling people's fears about security, there is the added issue of restricted mobility as people age ... there will need to be a policy response on the part of financial institutions on how to manage the online environment and make it more usable and appealing to older people," she says.

* Not her real name.

Make sure you get the right advice

Finding the best account

Most comparative information about accounts with banks and credit unions is available online. For people who don't have a computer or access to one, the phone numbers below will go some way to filling this gap.

Centrelink's financial information service - 13 23 00

This provides information on financial issues including financial planning and understanding financial or investment products, income and assets tests and taxation. As well as attending various public seminars, people can make an appointment to receive additional information from an officer. However, the service does not give investment advice or recommendations. It is free and open to anyone.

Veteran's affairs financial information service - 1800 113 304

The Commonwealth Department of Veterans' Affairs offers a similar free financial information service for veterans and war widows or widowers. It explains the income and assets tests, and is used to meeting the needs of small investors.

National information centre on retirement investments - 1800 020 110

This federally funded service provides a range of leaflets on aspects of retirement investment, as well as financial information by telephone. It is open to anyone needing information on investment products or about how to obtain further assistance. It does not give investment advice, or recommend financial products or planners.

From the Law and Justice Foundations NSW's 2004 report The Legal Needs Of Older People.

LOW FEE DEEMING ACCOUNTS: THE BIG FOUR. Source: www.canstarcannex.com.au Table not available on database
BEST BASE RATES ONLINE                                  
$10,000- $1 MILLION                                     
Company                 Base rate %             
FFCCS Credit Union              4.20            
Arab Bank               4.10            
RaboPlus                        4.00            
ANZ Smart Pig Acc               4.00            
Comtax Credit Union     4.00            
Members Equity Bank     4.00            
CURRENT AS AT 25/6/09 SOURCE: INFOCHOICE
BIG FOUR ONLINE SAVERS $10,000- $1 MILLION, RANKED BY RATE                                      
Company         Base rate %     Promo rate %    
ANZ             3.50            4.00    Before 17/7/09, earn up to 4% p.a. until 30/12/09
CBA             2.75            N/A     N/A
NAB             2.75            4.40    Before 16/8/09, earn up to 4.4% p.a. for 4 months
                                        from acc opening date
Westpac         2.75            4.30    Before 13/7/09, earn up to 4.3% p.a. for 4 months
                                        from acc opening date
CURRENT AS AT 25/6/09 SOURCE: INFOCHOICE