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Comparison of high interest rates savings accounts
Infographic: How to choose a savings account on finder.com.au
Use your savings style as a guide for getting to your savings goal. Our infographic below shows you how to choose a Savings account that suits your savings style.
finder.com.au high interest savings accounts
| Savings account | Maximum variable rate (p.a.) | Standard variable rate (p.a.) |
|---|---|---|
| RaboDirect High Interest Savings Account | 3.20% 4 months | 2.05% |
| St.George Maxi Saver | 3.00% 3 months | 1.05% |
| RAMS Saver Account | 3.15% Ongoing, conditions apply | 1.50% |
| ME Online Savings Account | 3.10% Ongoing, conditions apply | 1.30% |
| Citibank Online Saver | 3.05% 4 months | 1.75% |
| ANZ Online Saver | 2.75% 3 months | 1.30% |
Definition: High interest savings account
High interest savings accounts offer competitive interest rates to motivate you to save money. Typically, interest is calculated daily and paid monthly. All accounts also have free 24/7 online access to your funds. We've already done the hard work for you and compared savings accounts to give you an idea of what’s available. Complete your quick online application by clicking the Open button below.
The Internet has revolutionised savings accounts; the cost-effectiveness of electronic banking has made it possible for banks to offer the interest rates that they do now. There's also a lot of competition; small banks, building societies and credit unions also offer competitive products. When comparing savings accounts, the first thing most people look at is the interest rate.
While it's a good place to start, you need to look beyond the highest interest rate. Many online savings accounts have conditions attached, so you may not get the highest interest rate every month. This is why you should look at the standard variable rate as well as the maximum variable rate.
What are the benefits of a high interest savings account?
- You don't need to know anything about finance. Compared to other investments such as shares and property, a savings account is probably the easiest one to apply for. You can always reinvest what you have deposited there into another asset and it's almost impossible to get a negative return on a savings account.
- You don't need to take any risks. It's considered one of the safest investments in the financial system (next to a term deposit).
- You're buying time to learn. It's the stepping stone to learning how to invest – you can leave the money in there until you're comfortable enough to understand how other assets work.
- You can see results quickly. You can see progress after just a few months. You won't be earning millions of dollars, but you still have more than you started with.
How does a high interest savings account work?
High interest savings accounts are suited to those who want at-call access to their savings while earning interest. When you make a deposit into a high interest savings account, the standard variable rate associated with that account is calculated on your balance every day.
At the end of the month, or at the beginning of the next month, the bank will determine the total and add that amount to your account. Typically, the common factor is that you are getting an interest rate that is higher than what a transaction account would pay.
Use our sorter tool to help you find the highest interest rate
Filter your results using our table to find the best interest rate for you. The diagram below shows you what each filter means.
Other considerations for finding the highest interest rate
If you intend to hold a lot of cash, it's important that you find the best high interest savings account for your situation.
- Consider going online. Most physical banks offer disappointing interest rates compared to online financial institutions. This is because they have more overhead costs, which they usually pass on to the customers.
- Identify whether you're a regular saver or flexible saver. If you're a regular saver, consider going for an incentive or reward saver account. This way, you'll get the maximum amount of interest every month. Flexible savers may want to opt for an introductory bonus account so they get the bonus interest rate no matter how many withdrawals they make.
Video: How do I always get the highest rate?
Considerations when comparing savings accounts
What if I'm looking for a business savings account that allows me to deposit lots of cheques on a weekly basis?
Most banks charge a fee for depositing cheques. If you deposit a lot of cheques with small amounts, you may want to consider switching to electronic payments, as they tend to be free. Compare business accounts here.
Is it possible to have a savings account that allows more than two signatories?
Yes, although this is more common among business accounts. Read more about joint accounts here.
Does the payee's name matter when transferring funds electronically?
The payee's name is generally not used to make the transfer. Only the BSB number and account details are used when a transfer occurs.
Are there any benefits to opening a high interest savings account for my child?
Most banks offer competitive deals for full-time students, including bonus interest rates for regular deposits and no withdrawals as well as no account-keeping fee. Online accounts tend to pay a higher interest rate and charge fewer fees, catering to 'pocket money' savers gradually growing their balance overtime.
How do I compare high interest savings accounts?
Look for: High and competitive interest rates
We might be stating the obvious here, but make sure you know the difference between the standard rate and any introductory rate that the bank may be offering. Also, pay attention to the conditions in which you can earn bonus interest. The offer may only apply to new customers or you may need to meet deposit and withdrawal conditions.
Look for: Online flexibility with 24/7 access
If you're trying to dissuade yourself from dipping into your savings, then consider an account with limited or no accessibility. Term deposits offer you a higher rate of interest the longer you agree to keep your money inside. The catch is that you will have no access to your savings for the duration of the term, unless you want to pay a fee.
Consider: Going online
Aussies who are willing to manage their savings entirely online could benefit from keeping their savings in an online high interest savings account. Since these accounts require less overhead costs, customers are rewarded with a higher rate of interest.
Look for: Whether you can link your existing bank account, or you'll need to open another.
Some high interest savings accounts are required to be linked to a transaction account. Banks can dictate whether it needs to be a transaction account from the same institution or if it can be an account with a different bank. If you already have a transaction account, check to see if can link your high interest savings account to an account with another institution.
Look for: How interest is applied to your account.
Check to see when interest is paid and if interest will be applied on that amount as well in the next statement period.
Look for: Little to no fees charged on the account.
Check for any fees charged for maintaining the account. If you're required to open a transaction account, check what types of fees are charged for that account as well.
Look for: Little to no penalties for withdrawals.
Some high interest savings accounts will charge you a penalty for an early withdrawal. They could also adjust the interest rate to reflect the shorter time period that you left your savings in the account.
Yearly Interest ($) | Switch benefit ($)(7% vs 0.01%) | ||||
|---|---|---|---|---|---|
| Your balance ($) | at 0.01% | at 2.5% | at 5% | at 7% | |
| 1000 | 0.10 | 25.29 | 51.16 | 72.79 | 72.69 |
| 5000 | 0.50 | 126.44 | 255.81 | 361.45 | 360.95 |
| 10,000 | 1.00 | 252.88 | 511.62 | 722.90 | 721.90 |
| 25,000 | 2.50 | 632.21 | 1279.05 | 1807.25 | 1804.75 |
This table has been worked out on the basis that interest is calculated daily and paid monthly. It also doesn’t take into account any other deposits into your account; if you make additional deposits, you will accumulate more interest in the long term.
Not only can you earn money by switching to a high interest savings account, you could also save money: If you have money sitting in an everyday transaction account that pays very low interest, and you take into account any banking fees and transaction fees, it could turn out that you are actually losing money. With so many different high interest savings accounts available online, there's no excuse not to take advantage of one. The more you deposit into a high interest savings account, the more interest you will earn on those deposits over the long term.
Weigh up the pros and cons of a high interest savings account
Advantages
- You can reach your savings goals quickly. If you apply for a high interest savings account that matches your savings style, you can reach your savings goal faster.
- You can take advantage of introductory bonus rates as a new account. Some high interest savings accounts will give you a bonus interest rate for a limited time. This is typically a variable rate on top of another variable standard rate. If you switch accounts regularly to take advantage of offers like these, you could be giving your savings a big boost.
- They usually charge little to no fees. The majority of high interest savings accounts don't charge any fees for maintaining the account.
Disadvantages
- High balances tend to earn a lower rate. Many accounts work on a tiered interest rate structure, which means that the more you have in your account, the lower the standard variable rate.
- Transfer times can last up to 3 business days. The limited access, especially for online accounts, could prove troublesome if you suddenly need the money for an important purchase. Transfers could take up to three business days.
Savings accounts vs term deposits
High interest savings accounts offer competitive rates, but conditions apply in most cases. For example, you might need to deposit a certain amount every month and not make any withdrawals. Introductory bonuses also only last a few months.
Term deposits, on the other hand, offer good interest rates over a fixed term of between 7 days and 12 months. There is usually a minimum deposit required, which you are committing to a short-term to medium-term investment. Term deposits can be broken, but a hefty fee usually applies.
Traps to avoid when it comes to high interest savings accounts
It's important that you choose the high interest savings account that best serves your needs. This can help you avoid scenarios such as:
- Interest rate penalties if you don't meet the terms and conditions. With term deposits, it's important to choose the right term duration. If you choose terms that are too long and find yourself needing the money sooner, you'll have to pay a penalty to have your term deposit released early.
- Variable interest rates could mean that you lose out when the cash rate decreases. Banks can lower their rates in response to many factors. Bonus introductory rates are usually withdrawn after a few months, or at the end the introductory period. If the rate on your account has changed and you're not sure why, contact the bank.
- Ensure it's covered by the Government Guarantee. Most banks and financial institutions are guaranteed by the Australian Government, which means eligible deposits are insured up to $250,000 per person, per institution. If you have more than $250,000, it's important to diversify your funds across different banks to take advantage of the guarantee.
How do I apply for a high interest savings account?
Once you’ve clicked through to the bank's secure application page, you will typically need to provide:
- Your personal details
- Your tax file number and related information
- Details of the account you want to link to your new high interest savings account
Can I open a high interest savings account as a tourist in Australia?
Depending on your visa type, it may be possible for you to open a bank account in Australia. You can learn more about opening a bank account as a non-resident here and compare different migration programs offered by certain lenders. Speak with the financial institution directly about eligibility requirements for opening an account as a temporary visitor.
- No minimum amount that you have to keep in your account
- Interest worked out daily and added to your account monthly
- No limit on deposits or withdrawal amounts
- No monthly account-keeping charges
- Debits and credits are usually free to process
- Very limited transactions available - branch access, ATM withdrawal, overdraft, credit and debit cards normally not available on accounts of this type
- Easy to open
If I open a high interest rate savings account with a bank that is offering a good introductory rate and switch to another bank once the introductory rate period ends and keep doing that for a while, then can I go back to my first bank and open/re-open a new high interest rate savings account and get the introductory rate again (if on offer)?
In short, can I keep going through the cycle over and over again ad get the introductory rate on offer each time?
Thanks.
Hi Andy,
Thanks for your comment.
The introductory bonus rate attached to some savings accounts often apply only to the first account you open. This means that if you open the same savings account the second or third time around, it’s likely that you won’t get the bonus rate again. However, this is also subject to some exceptions as set by the bank.
I hope this answers your question.
Cheers,
Anndy
With ing,me and citibank, do you need to give your Tax file number.I’m sure that when I applied to 1 of these that they stated that because i was on a pension atn wasn’t needed.
Hi Darren,
Thanks for your question.
This will depend on your personal situation and how much interest you’ll be earning.
You do not have to provide your TFN to open the account, but if you don’t the bank is legally required to deduct tax from any interest earned on the account above a certain threshold.
hi,
Just wondering if continuously opening and closing high interest accounts will affect my credit score?
Thanks.
Hi Amanda,
Thanks for your question.
No, continuously opening and closing high interest accounts won’t affect your credit score.
For the ING Direct offer. The the offer is only available on balances up to 100k. When I put 200K in and calculate the interest earned is twice what it was for 100k. Given the max 100k I thought the calculated amount should not change, or least not simply double. Is there a fault with the calculator or do I need to rework my maths?
Thanks
Hi Darryl,
Thanks for your question.
Apologies for the inconvenience, there was a fault with the calculator. Thanks for bringing this to our attention.
It should be working with the proper figures now, please let us know if there are anymore issues.
Cheers,
Shirley
can you tell me what banks or building societies are not in the government guarantee fund
Hi John,
Thanks for your question.
Unfortunately we’re not aware of financial institutions that are not covered by the Government Guarantee. For this type of information it’s best to speak to ASIC.
Cheers,
Shirley
Hi.
I’m tempted by the high rate offered by ING direct savings maximizer which requires a linked Orange Everyday bank account and a deposit of 1000+ per month to get the full high rate.
My issue is having to open up an orange Everyday Bank Account which doesn’t have much benefit for me because I already have an everyday account at a major bank, and who has the energy to keep up with multiple everyday accounts?
If I open up the Orange Everyday account together with Savings Maximizer to get the full rate, could I simply transfer $1000+ from my usual everyday account (with a major bank), into the Orange Everyday, then straight into the Savings Maximizer. I.e. keep nothing in the Orange Everyday account but just touch bases with it. Is it allowed to be used this way?
Thanks.
p.s. I love this website and have told many people about it. Keep up the good work. :)
Hi Jessie,
Thanks for your enquiry, and thanks for the feedback.
As you mentioned, with the ING Direct Savings Maximiser account, if you also open an Orange Everyday account and deposit at least $1,000 from any external bank into it each month, you will earn the maximum variable rate which is currently 3.50% p.a.
Interest is calculated daily on the closing balance and added to your account at the end of each month. Please note that this maximum variable rate is only applicable to one savings account and for balances that don’t exceed $100,000.
As long as you meet this deposit criteria to earn the maximum variable rate, you can withdraw and then transfer the funds to another account as you see fit. Keep in mind that you may not benefit from compound interest for the Orange Everyday account in this case.
I hope this clarifies things for you.
Thanks,
Belinda
Hello.
I would like to speak to you today due to some issues with this website, I have had an undergoing issue every time I go onto this website, it is quite infuriating and makes me sad. You see one day I had my Jammy dodgers and tea with 2 spoonful’s of sugar, before approaching my computer I ran into a little problem because my tea was too hot. then I approached my computer and logged on, only to see my internet wasn’t working. then I came onto this website to look at some good deals for my banking. Then a question entered my mind. What is the appropriate heat for a good cup of tea and also how many sugars I should use.
Please respond soon as my tongue is burning.
Thank you
Sincerely
Barnacles Buckminster
Hi Barnacles Buckminster,
Thanks for your question and we’re sorry to hear about your situation.
After doing some research, we’ve found the following suitable temperatures for tea:
- Flavoured white tea: 79.4 celsius
- Green tea: 79.4 celsius
- Flavoured green tea: 79.4 celsius
- Oolong tea: 79.4 celsius
- Black tea: 90.6 celsius
- Flavoured black tea: 90.6 celsius
- Mate tea: 97.8 celsius
- Rooibos tea: 97.8 celsius
- Herbal tea: 97.8 celsius
It’s been debated that sugar adds no health benefits to your tea. You may want to consider leaving out the sugar in the future.
I hope this has helped and makes your banking comparison experience better.
Cheers,
Shirley