What to look for when you compare savings accounts
High interest rate
The higher the interest rate, the more interest you'll earn and the more your balance will grow. This is the most important feature to consider when choosing your account.
No fees
Savings accounts shouldn't charge you any fees. If you're getting charged a fee, know that this is not common and there are plenty of fee-free accounts.
Conditions you can meet
Savings accounts typically have monthly deposit requirements or spend conditions in order to earn the high bonus rate. Make sure you can meet these.
How to find the best savings account
The best savings account for you will depend on your age, financial situation, savings goals and spending habits. Here are a few different hypothetical examples of how you might pick a savings account based on your personal savings style.
You earn a regular income and are able to meet a monthly deposit condition
The best savings account for you will likely be one with the following:
An ongoing bonus interest rate: Because you earn a regular income and are confident in your ability to save, a savings account with an ongoing, high bonus rate would offer the best rate for you.
A monthly deposit condition: Usually the accounts with the best bonus rates have a monthly deposit condition, often $1000 per month, which is ideal for people with good savings habits and a regular income.
You have a short-term savings goal
Let's say you want to give your savings a boost for 3-5 months only to help you save for an overseas holiday or another large purchase. Because you're saving for a specific goal in the near future, you aren't planning to keep your cash in the account for too long and you don't want to have to meet any ongoing monthly conditions.
The best savings account for you will likely be one with the following:
An introductory bonus interest rate: Accounts with an introductory bonus rate offer a higher rate for the first 3-5 months only, with no conditions to meet.
A term deposit: A term deposit allows you to lock your money away for a set period of time and earn a fixed return, with no monthly conditions to meet.
Can't commit to a monthly deposit condition
Let's say you don't earn a regular income, or you're currently not in a position to meet a monthly deposit condition. Plus, perhaps you're also prone to dipping into your savings from time to time for impulse purchases or unexpected expenses.
The best savings account for you will likely be one with the following:
An ongoing bonus interest rate: An account with an ongoing bonus interest rate will give your balance the best chance at growing (just make sure you check the conditions!)
No (or low) monthly deposit condition: Look for a bonus saver account that doesn't have a monthly deposit condition. Or, look for one that you can comfortably meet (some accounts only ask you to deposit $20 per month).
More ways to earn interest and save
Did you know you can earn more than 4% p.a. with a term deposit? Here are a few accounts offering above 4% p.a. when you lock your savings for a fixed term length.
Why keep your cash in a savings account?
Savings accounts are safe - your deposit up to $250k is protected by the Australian government
Savings accounts offer compound interest, so you can earn interest on your interest
The money in your savings account is quick and easy to access if you ever need it
Interest rates on savings accounts are going up!
The role of a savings account
Our expert says
"Although shares historically offer better long-term returns, people often ask why keep cash in a savings account. The answer is simple: a savings account offers certainty, security, and acts as a financial safety net. Unlike volatile shares, you won't lose money, and you can quickly access your cash when needed."
Alison Banney
Author
How does a savings account work?
Usually savings accounts are connected to transaction accounts and instead of the money sitting in your bank account, you can transfer it to your savings account and it'll earn interest (if you meet the account conditions, of course). The special thing about savings account interest is it's compound interest, meaning you'll earn interest on your interest.
Is it best to stick with the Big Four or go with a smaller bank?
Wondering which bank is best to open up your savings account with? Chances are you may be thinking of joining the Big Four. We've put together this pros and cons list of the Big Four VS smaller banks to help you make a decision easier.
May offer better customer service as they operate 24/7
Easy access to ATM's (and no-fee withdrawals) due to large distribution
Can easily manage other loans through the same network
Better funding to these banks mean more advanced banking technology
Comprehensive range of products offered
Able to operate in person and online
Depersonalised customer experience due to large customer base – can get "lost in the noise"
Interest rates may not be as competitive
Smaller Banks
May offer more competitive interest rates
May offer more personalised customer service
Some banks may offer advanced banking technologies like app banking
You may be able to negotiate waiving fees on a case-by-case basis
Not likely to have in-person support – may be online only
Limited access to ATM's due to low distribution
How do I open an Australian savings account?
In most cases you can apply and open the savings account online, as long as you're able to provide documentation that confirms your identity and residency. If you're a new customer to the bank, you'll need to verify your identity for legal reasons. For the online savings and bonus saver accounts, some banks will allow an Australian as young as 12 years old to have an account opened in their name.
FAQs on best savings accounts
It's very unlikely. The RAB has already cut the cash rate this year, and many savings account rates dropped as a result.
Introductory savings rates are often among the highest in the market, but they're only available for a short period of time. If you have a short term savings goal, or you're willing to move your money around every 4-6 months, then a high introductory savings rate could be worth considering.
ING's savings account has been very popular ever since finance expert Scott Pape recommended it in his book The Barefoot Investor. At the time when the book was first written in 2016, ING's savings rate was the best in market. ING Savings Maximiser's rate today is 5.5% which remains one of the highest in market. However, ING's account does come with several conditions to earn that rate, which could be difficult to meet for some customers. In comparison, some other accounts with similar rates have very minimal conditions to meet. It also only pays bonus interest on balances up to $100,000, while many other accounts pay interest on larger balances up to $250,000.
Any interest earned on your savings account is treated as income and should be declared when lodging your tax return. This will often already be pre-filled for you, as the ATO usually already has access to your annual bank statements.
Currently, any savings rates above 4% are quite good (there are even a few rates above 5% still). Remember - a good savings rate is one that you can easily earn by meeting the account conditions. There's no point opting for the highest rate in the market if you can't meet the account conditions.
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To make sure you get accurate and helpful information, this guide has been edited by
David Gregory
as part of our
fact-checking process.
Alison is an editor at Finder and a personal finance journalist with over 10 years of experience, having contributed to major financial institutions and publications such as Westpac, Money Magazine, and Yahoo Finance. She is frequently quoted in media outlets like SmartCompany and SBS, offering expert insights on superannuation and money management. Alison holds a Bachelor of Communications in Public Relations and Journalism from the University of Newcastle, and has earned three ASIC RG146 certifications in superannuation, securities and managed investments and general financial advice, ensuring her expertise is fully aligned with ASIC standards.
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