honeymoon-rate

The honeymoon rate versus the real rate

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.

Savings Account Offer

AMP Saver Account

3.00 % p.a.

max rate

2.10 % p.a.

standard variable rate

Savings Account Offer

Introductory rate of 3.00% p.a. for 4 months, reverting to a rate of 2.10% p.a. The bonus rate offer is for new AMP Saver customers only, and applies to the first $250,000 deposited.

  • Maximum Rate: 3.00% p.a.
  • Standard Variable Rate: 2.10% p.a.
  • Introductory period: 4 months
  • Monthly fees: $0.00
Go to site
Promoted

See the differences between honeymoon and real rates below

Rates last updated May 23rd, 2019
$
$
months
Name Product Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees Min Bal / Min Deposit Interest Earned Product Description
AMP Saver Account
3.00%
2.10%
0.90%
$0
$0 / $0
Introductory rate of 3.00% p.a. for 4 months, reverting to a rate of 2.10% p.a. The bonus rate offer is for new AMP Saver customers only, and applies to the first $250,000 deposited.
HSBC Serious Saver
3.10%
1.20%
1.90%
$0
$0 / $0
Receive a maximum variable rate of 3.10% p.a. for 4 months, reverting to an ongoing rate of 1.20% p.a. for each month you don't make any withdrawals from the account. Available on balances below $1,000,000.
Citibank Online Saver
2.90%
1.60%
1.30%
$0
$0 / $0
Introductory rate of 2.90% p.a. for 4 months, reverting to a rate of 1.60% p.a. Available on balances below $500,000.

Compare up to 4 providers

Rates last updated May 23rd, 2019
$
$
months
Name Product Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees Min Bal / Min Deposit Interest Earned Product Description
UBank USaver
2.87%
1.81%
1.06%
$0
$0 / $0
Earn up to 2.87% p.a. by linking your USaver account to a UBank Ultra transaction account and transferring at least $200 per month into either account. This offer is available on balances up to $200,000.
Suncorp Growth Saver Account
2.60%
0.20%
2.40%
$0
$0 / $0
Ongoing, variable 2.60% p.a. when you make a total deposit of at least $200 and make no more than one withdrawal. Available on the entire balance.
Bankwest Hero Saver
2.60%
0.01%
2.59%
$0
$0 / $0
Ongoing, variable 2.60% p.a. rate when you deposit at least $200 each month and make no withdrawals. Available on balances up to $250,000.

Compare up to 4 providers

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 0.50% p.a. However this account also includes a bonus interest rate of 2.01% p.a. for the first three months of the account making the headline rate 2.51% 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.

You may also be interested in

Was this content helpful to you? No  Yes

Related Posts

Get more from Finder

Savings Account Offers

Important Information*

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Ask a question
Go to site