honeymoon-rate

The Honeymoon Rate Versus the Real Rate

Information verified correct on December 3rd, 2016

Why do promotional rates for savings accounts seem too good to be true?

Introductory, promotional or maximum variable rates are high rates for generally up to 4 months of your savings account. These high rates are more commonly known as “honeymoon” rates.

Most people fall into the trap of being enticed by the honeymoon rate. Be warned that this rate only lasts for a certain period of time. Once it ends, you will end up with the base or standard variable rate which could put you in a worse-off position.

Savers that open an account with a promotional rate must be aware of when the honeymoon period will end. Most of these accounts let you withdraw your money and your funds are usually available at-call.

A three to four month honeymoon rate is only a good deal if the base interest rate over the life of the savings account is going to achieve your savings goals, in the time period that suits you.

For example, the Westpac eSaver savings account has a standard variable rate of 1.25% per annum (p.a.). However this account also includes a bonus interest rate of 1.46% p.a. for the first three months of the account making the headline rate 2.71% p.a.

When choosing a savings account, you could base your decision on the base interest rate and not the honeymoon rate. Once the honeymoon period is over, your savings account will revert back to the initial interest rate.

Although there is nothing wrong with the bank advertising a promotional rate, be warned that with introductory bonus savings accounts it will come to an end and most people are seduced by the rate or forget that it reverts to a much lower rate.

So if a rate seems to high to be true, it is probably a honeymoon rate and it’s worth checking what the standard rate of the account is.

If you consistently want a honeymoon rate and are willing to meet the conditions, we recommend that you read about bonus saver savings accounts. Alternatively, if you want a fixed interest rate we suggest you read about term deposits.

What is a base rate?

Base or standard variable interest rates is the rate that the account has when the honeymoon period ends. For example, most savings accounts have a variable interest rate and the honeymoon rate adds to that if you’re a new customer (that is, you’ve never held the account before).

When you are shopping for a savings account that has a honeymoon rate, be aware that this rate only lasts for a limited time. Make sure that the base rate will continue to achieve your savings goals and you’re not only opening the account because of the headline rate.

See the differences between honeymoon and real rates below

Rates last updated December 3rd, 2016
$
$
months
Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees Min Bal / Min Deposit Interest Earned
RaboDirect High Interest Savings Account
Introductory rate of 3.20% p.a. for 4 months, reverting to a rate of 2.05% p.a. Available on balances below $250,000.
3.20% 2.05% 1.15% $0 $0 / $0 Open More
AMP Saver Account
Introductory rate of 2.55% p.a. for 4 months, reverting to a rate of 2.10% p.a. Available on balances below $5,000,000.
2.55% 2.10% 0.45% $0 $0 / $0 Open More
BankSA Maxi Saver
Introductory rate of 3.00% p.a. for 3 months, reverting to a rate of 1.05% p.a. Available on the entire balance.
3.00% 1.05% 1.95% $0 $1 / $1 Open More
Bank of Melbourne Maxi Saver
Introductory rate of 3.00% p.a. for 3 months, reverting to 1.05% p.a. Available on the entire balance.
3.00% 1.05% 1.95% $0 $1 / $1 Open More
St.George Maxi Saver
Introductory rate of 3.00% p.a. for 3 months, reverting to a rate of 1.05% p.a. Available on balances below $5,000,000.
3.00% 1.05% 1.95% $0 $1 / $1 Open More
ANZ Online Saver
Introductory rate of 2.85% p.a. for 6 months, reverting to 1.25% p.a. Available on the entire balance.
2.85% 1.25% 1.60% $0 $0 / $0 Open More
HSBC Serious Saver
Introductory rate of 2.25% p.a. for 4 months, reverting to a rate of 1.60% p.a. Available on balances below $1,000,000.
2.25% 1.60% 0.65% $0 $0 / $0 Open More
Rates last updated December 3rd, 2016
$
$
months
Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees Min Bal / Min Deposit Interest Earned
ME Online Savings Account
Ongoing, variable 3.05% p.a. rate when you link to a ME Everyday Transaction account and make a weekly purchase with your Debit MasterCard using tap & go. Available on balances up to $250,000.
3.05% 1.30% 1.75% $0 $0 / $0 Open More
ING DIRECT Savings Maximiser
Ongoing, variable 2.75% p.a. when you link to an ING Orange Everyday bank account and deposit $1,000+ each month. Available on balances up to $100,000.
2.75% 1.60% 1.15% $0 $0 / $0 Open More
RaboDirect High Interest Savings Account
Introductory rate of 3.20% p.a. for 4 months, reverting to a rate of 2.05% p.a. Available on balances below $250,000.
3.20% 2.05% 1.15% $0 $0 / $0 Open More
ANZ Progress Saver
Ongoing, variable 1.91% p.a. when you link to any Australian everyday bank account and deposit $10+ each month. Available on the entire balance.
1.91% 0.01% 1.90% $0 $10 / $10 Open More
Westpac Reward Saver
Ongoing, variable 1.85% p.a. when you deposit at least $50 and make no withdrawals each month. Available on the entire balance.
1.85% 0.01% 1.84% $0 $0 / $0 Open More
Bank of Melbourne Incentive Saver
Ongoing, variable 1.85% p.a. when you make at least one deposit and no withdrawals each month. Available on the entire balance.
1.85% 0.01% 1.84% $0 $1 / $1 Open More
Australian Unity Easy Saver
Introductory rate of 2.90% p.a. for 4 months, reverting to a rate of 1.70% p.a. Available on balances below $250,000.
2.90% 1.70% 1.20% $0 $0 / $0 Open More
BankSA Incentive Saver Account
Ongoing, variable 1.85% p.a. when you make at least one deposit each month and no withdrawals. Available on the entire balance.
1.85% 0.01% 1.84% $0 $0 / $0 Open More
AMP Cash Manager
Ongoing, variable 1.50% p.a. when you link to an AMP Visa debit card and deposit $2,000+ each month. Available on the entire balance.
1.50% 1.50% 0.00% $5 $0 / $0 Open More
HSBC Flexi Saver Account
Ongoing, variable 2.00% p.a. when you link to any Australian bank account and deposit $300+ each month (other conditions apply). Available on balances up to $5,000,000.
2.00% 1.50% 0.50% $0 $0 / $0 Open More
Bankwest Hero Saver
Ongoing, variable 2.65% p.a. rate when you deposit at least $200 each month and make no withdrawals. Available on balances up to $5,000,000.
2.65% 0.01% 2.64% $0 $0 / $0 Open More

Shirley Liu

Shirley is finder.com.au's publisher for banking and investments. She is currently studying a Masters in Commerce (Finance) and is the author of hundreds of articles. She is passionate about helping Aussies make an informed decision, save money and find the best deal for their needs.

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Savings Account Offers

Learn about our information service
ME Online Savings Account

Maximum Variable Rate

3.05%

Standard Variable Rate

1.30
ING DIRECT Savings Maximiser

Maximum Variable Rate

2.75%

Standard Variable Rate

1.60
Bankwest Hero Saver

Maximum Variable Rate

2.65%

Standard Variable Rate

0.01
RaboDirect High Interest Savings Account

Maximum Variable Rate

3.20%

Standard Variable Rate

2.05

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