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High interest savings accounts

A high interest savings account is like a regular savings account, but better. You can earn up to 2.5% p.a. interest on your savings with a high interest savings account.

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High interest savings accounts offer a higher interest rate when you meet a couple of account conditions, such as making regular deposits. Use the table below to compare some of the best high interest savings accounts in the market right now.

High interest savings accounts

Name Product Maximum Variable Rate p.a. Standard Variable Rate p.a. Intro Period Government Guarantee Monthly Max Rate Conditions
MyState Bank Bonus Saver Account
MyState Bank Bonus Saver Account
1.60%
0.05%
Ongoing
  • Deposit $20
  • 5 debit card purchases
Deposit $20, 5 debit card purchases.
Westpac Life (18-29 year olds only)
Westpac Life (18-29 year olds only)
2.50%
0.15%
Ongoing
  • Grow your balance
  • 5 debit card purchases
Grow your balance , 5 debit card purchases.
Rabobank High Interest Savings Account
Rabobank High Interest Savings Account
2.10%
1%
4 months
  • N/A
N/A.
Westpac Life
Westpac Life
0.85%
0.15%
Ongoing
  • Grow your balance
Grow your balance.
Bank of Queensland Smart Saver Account - 36+ years
Bank of Queensland Smart Saver Account - 36+ years
2.00%
0.05%
Ongoing
  • Deposit $1,000
  • 5 eligible purchases
Deposit $1,000 , 5 eligible purchases.
Great Southern Bank Youth eSaver Account (0-17 year olds only)
Great Southern Bank Youth eSaver Account (0-17 year olds only)
3.25%
3.25%
Ongoing
  • N/A
N/A.
Bank of Queensland Future Saver Account - 14 to 35 years
Bank of Queensland Future Saver Account - 14 to 35 years
3.00%
0.05%
Ongoing
  • Deposit $1,000
  • 5 eligible transactions
Deposit $1,000, 5 eligible transactions.
Commonwealth Bank NetBank Saver
Commonwealth Bank NetBank Saver
0.50%
0.3%
5 months
  • N/A
N/A.
NAB iSaver
NAB iSaver
0.80%
0.3%
4 months
  • N/A
N/A.
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What is a high interest savings account?

A high interest savings account is a savings account that pays a higher interest rate when certain conditions are met. Because it offers a higher interest rate than a typical savings account, there are usually a few conditions to meet to earn the high rate. For example, you might be required to meet a minimum monthly deposit condition 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.

To get an idea of the interest rates on offer, take a look at some popular high interest savings accounts and their max bonus interest rate on offer in the table below. *Note that these are the top 5 accounts based on the total variable rate only, and some have age restrictions.

Top 5 high interest savings accounts

High interest savings accountHigh interest rate p.a.
Westpac Life Account2.5% p.a.
Great Southern Bank Youth eSaver3.25% p.a.
ING Savings Maximiser2.1% p.a.
Rabobank High Interest Savings Account2.1% p.a.
AMP Saver Account1.35% p.a.

How do high interest savings accounts work?

Here's how you access your money, how interest is applied and the conditions you might need to meet with a high interest savings account.

How to access your savings in a high interest savings account

You generally link a high interest savings account to your everyday bank account, usually with the same bank. This allows you to easily move money back and forth from your high interest savings account to your everyday bank account when needed. This is handy, as high interest 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.

How to earn interest on a high interest savings account

High interest savings accounts 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 to a high interest savings account, 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.

High interest savings account conditions

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 savings accounts usually require you to meet one or several of these conditions:

  • Open an everyday bank account with the same bank and link your high interest savings account to it
  • Deposit a set amount of money each month, from as little as $20 with the MyState Bank Bonus Saver Account or as much as $2,000 with the Virgin Money Boost Saver account.
  • Make a certain number of transactions each month from the linked bank account (usually 4-5 transactions per month)
  • Grow you balance each month
  • Limit your withdrawals or make no withdrawals at all

Some accounts will ask you to met just one condition, while others will ask you to meet a few.

High interest savings account fees and charges

High interest savings 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 high interest savings account to an everyday spending or transaction account, which might have fees and charges.

High interest savings account interest rates

High interest 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. During 2020 and 2021 most banks dropped their interest rates on high interest savings accounts, as the official cash rate was so low. 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.

The safety of high interest savings accounts

A high interest savings account is one of the safest places to keep your cash. This is because the money in your savings account with an Australian bank is protected by the Government's bank guarantee scheme. Under this scheme, your deposit up to $250,000 in a high interest savings account is guaranteed by the Government, even if something were to happen to the bank.

Another reason why high interest savings account 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 vs standard savings accounts

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.

BankHigh interest savings accountStandard savings account
WestpacWestpac Life (under 30s): 2.5% p.a. 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 MoneyVirgin 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.
INGING 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.

Benefits of a high interest savings account

  • A higher interest rate helps your savings grow faster.

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 money is safe.

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.

  • You can access the money at any time.

The money in your high interest savings 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.

  • It's a good incentive to save.

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.

  • There are no fees.

High interest 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.

How to compare high interest savings accounts

There's more to consider than just the high interest rate. Think about the following when you compare high interest savings accounts:

  • Is the interest rate competitive?
  • Can I meet the monthly deposit requirement every month without putting myself into financial stress? If you can't, consider an account with a smaller monthly deposit condition.
  • Is it important to me that I keep my existing everyday bank account? If yes, consider a high interest savings account with that same bank.
  • Is the high rate for an introductory period only (e.g. for the first 4-5 months)? If it is, will I be happy to change accounts again after this?
  • Am I able to make withdrawals from the account if I need to without losing my interest that month?

A good interest rate is important, but if you can't realistically meet the account conditions there's little point in opening that account. It could be worthwhile to choose an account with a slightly lower interest rate and conditions you can more easily meet.


High interest savings accounts tips and traps

Here are some tips to help you choose the right high interest savings account for you and some traps to avoid.

Hot tip: How to always get a high interest rate

A lot of high interest savings accounts offer special bonus introductory rates for the first few months only. This is a way for the bank to entice you to open an account. For example, the Rabobank High Interest Savings Account offers a competitive 2.1% p.a. for the first 4 months, which then drops down to the standard variable rate of 1% p.a..

So you could open this account to get the high rate, and then after the introductory period ends, you can move your savings into another account with a different bank to take advantage of their high introductory rate. Rinse and repeat to ensure you're always getting a high rate. Just remember, these offers are for new customers only so you can only open each account and get the high rate once.

Tips

  • Make sure you're comfortable with the account conditions. If you can't realistically meet the account conditions each month, you won't earn the high interest rate so it defeats the purpose of opening that account.
  • Switch accounts constantly. To ensure you are always earning the highest rate, you could continually switch savings accounts after the introductory period ends.
  • Compare accounts regularly. Unlike some other financial products, savings accounts are constantly changing their rates. This means you might have the highest rate one month but not necessarily the next.
  • Look at the variable base rate too. Don't just look at the headline rate – the variable base rate is what you'll earn if you can't meet the account conditions one month, so make sure to check what this rate is too.

Traps

  • Introductory offers are for limited times. If you open an account that offers a high introductory rate for a few months, don't forget that this rate will drop after the introductory period ends. It's a good idea to set yourself a reminder to compare savings accounts again after this period.
  • The account conditions might be too difficult to meet. To find the best savings account, you can't look at the interest rate without considering the account conditions. Some accounts will require you to deposit $2,000 or more each month to earn the high rate, which may be difficult to meet if you're a casual worker, you work part time or you're in the gig economy.
  • The linked transaction account might have fees. High interest savings accounts will often require you to also open a transaction account with the same bank, and this account might come with fees and charges.

How do I apply for a high interest savings account?

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:

  • Your personal details such as full name and contact information
  • Your tax file number
  • Documents to verify your identity and age, like your driver's licence or passport

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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