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These accounts offer a higher interest rate when you meet a couple of account conditions, such as making regular deposits. Use our table to compare some of the best high interest savings accounts in the market right now.
It's a savings account that pays a higher interest rate than a standard account. Because these accounts offer a higher interest rate, there are usually a few conditions to meet to earn it. For example, you might be required to deposit a minimum amount each month or limit your withdrawals from the account. A regular savings account, in comparison, will offer a lower interest rate on your balance each month, but there usually won't be account conditions to meet.
Over the last few years savings rates have been at all-time lows, driven by a historically-low cash rate. The RBA's official cash rate has been at just 0.10% for the past 2 years, which resulted in ultra-low home loan rates and, in turn, low savings rates too. However the cash rate was recently lifted to 0.35% in May and again in June by 0.5%, and we've already seen many savings accounts increase their rates as a result. Savings rates are still quite low, but they're definitley on the way up.
You'll notice a few different rates when you compare accounts, here's what they mean:
Compared to an everyday transaction account, which usually pays no interest, and a standard savings account, which won't pay much interest, a high interest account can help you grow your savings faster.
Your savings are protected by the Australian government under the government guarantee scheme. Most banks and financial institutions are included in the scheme, which means eligible deposits are insured up to $250,000 per person, per institution.
The money in your account is your money, and it's readily and easily available whenever you need it. Unlike a term deposit, which locks your funds away, you can move the money from your high interest account into your everyday bank account to spend it within seconds of needing it.
Because you often need to deposit money regularly in order to earn the high interest rate, these accounts are a great incentive to save money. They can also be a good motivation to keep your money in the account earning interest rather than spending it on day-to-day items and impulse purchases.
Savings accounts don't charge any account-keeping fees, and there are no fees to add money into or move money out of the account.
There's more to consider than just the high interest rate. Think about the following when you compare accounts:
Alison Banney, Finder's banking editor
"A high rate is important, but it's not the only thing to consider. The savings rate on my own account isn't the highest in market, but it has monthly deposit conditions I can easily meet and is linked to an everyday bank account with the same bank, which I find really helpful. If you can't meet the account conditions each month there's little point opening the account, because you won't earn the high rate anyway."
Currently the highest rate you can get is 3% with a Bank of Queensland Future Saver Account. This is a great rate, but it does have some limitations. Firstly, it's only available for customers aged 14-35 and on balances under $50,000 (most accounts without age restrictions will pay interest on much larger balances up to $250,000 or more). You also need to open a bank account with the same bank and deposit at least $1,000 a month.
If this account doesn't suit you or you're not eligible, here are another 5 top savings rates.
| Account | Total interest rate p.a. |
|---|---|
| Westpac Life Account | 2.5% p.a. |
| Great Southern Bank Youth eSaver | 3.25% p.a. |
| ING Savings Maximiser | 2.1% p.a. |
| Rabobank High Interest Savings Account | 2.1% p.a. |
| Virgin Money Boost Saver Account | 2% p.a. |
Here's how you access your money, how interest is applied and the conditions you might need to meet.
Savings accounts with a higher interest rate will offer a bonus interest rate on top of the base interest rate each month that you meet the account conditions. This gives you the chance to earn extra interest each month. A standard savings account, in comparison, will usually only offer the standard base interest rate with no option to earn extra interest.
The money in your account benefits from compound interest that is calculated daily and paid monthly. Compound interest allows you to earn interest on your interest, helping your money grow quicker.
For example, let's say your balance was $10,000 and you earned $100 in interest during the month. The following month, interest would be calculated on your full balance of $10,100 (that's your original balance plus the interest earned last month), so you'd earn even more interest the second month. So technically, you don't even need to deposit money regularly for your savings balance to grow.
You generally link a savings account to your everyday bank account, usually with the same bank. This allows you to easily move money back and forth from your savings account to your everyday bank account when needed. This is handy, as savings accounts don't come with a debit card to access your money (but bank accounts do). Although you can't spend the money in your savings account using a debit card, you can still access it almost instantly by transferring it to your bank account and spending the money from there.
As we said earlier, in exchange for a high interest rate on your savings there are usually a few account conditions you need to meet. This varies from bank to bank, but most accounts require you to regularly deposit money and keep growing your balance (which is a good thing if you're trying to save!).
High interest accounts usually require you to meet one or several of these conditions:
Some accounts will ask you to met just one condition, while others will ask you to meet a few.
Savings accounts all offer variable interest rates. Similar to a variable rate home loan, a variable savings rate means it can change at any time, if the bank decides to do so. The opposite of a variable rate is a fixed rate, which is offered on term deposits. A fixed rate doesn't change and is locked in for a set period of time.
During 2020 and 2021 most banks dropped their savings rates, as the official cash rate was so low. Since the RBA has lifted the official cash rate in May, we've started to see banks raise their savings rates.
These accounts typically have no account-keeping fees and no regular charges. The account is designed to help you save money, not get eaten away by fees. However, in order to access the money, you'll need to link the account to an everyday spending or transaction account, which might have fees and charges.
A savings account is one of the safest places to keep your cash. This is because the money in account with an Australian bank is protected by the Government's bank guarantee scheme. Under this scheme, your deposit up to $250,000 is guaranteed by the Government, even if something were to happen to the bank.
Another reason why these accounts are so safe is because your balance will never go backwards if you don't make withdrawals. Unlike investing in shares which could see you lose money if the share price falls, the money in your savings account can't fall or go down unless you decide to spend it.
High interest savings accounts offer better interest rates, but with more conditions attached. If you're looking for a set-and-forget option without having to meet any ongoing conditions, a standard savings account still offers some level of interest but without any effort on your end.
Let's take a look at some high interest savings accounts and regular savings accounts from the same bank, so you can see the difference.
| Bank | High interest savings account | Standard savings account |
|---|---|---|
| Westpac | Westpac Life (under 30s): 2.5% p.a. when you link to a Westpac Choice account, grow your balance each month, keep your balance above $0 and make 5+ transactions/month. | Westpac eSaver: 0.75% p.a. for the first 5 months with no conditions to meet. |
| Virgin Money | Virgin Money Boost account (25+ year olds):2% p.a. when you link to a Virgin Money Go Transaction Account, deposit $2,000/month and make 5+ transactions/month. | Virgin Money Grow Saver: 1.5% p.a. each month you make at least 1 deposit and make no more than 1 withdrawal. |
| ING | ING Savings Maximiser: 2.1% p.a. when you link to an ING Orange Everyday account, deposit $1,000/month, make 5+ purchases/month and grow balance. | ING Savings Accelerator: Up to 1.2% p.a. on large balances, with no conditions to meet. |
Here are some tips to help you choose the right account for you and some traps to avoid.
You can open an account online in a matter of minutes. It's free and easy to do and requires little effort or paperwork. Once you’ve clicked through to the bank's secure application page, you will typically need to provide the following:
Once you've finished the application form and the bank has verified your identity, your account will be opened and you'll be able to start transferring money into it and earning interest.
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