Prefer an Interest Rate That’s in Your Best Interest?

How can you be sure that you are getting the best interest rate for your hard earned savings?

The purpose of keeping your money in a savings account is that it provides you with a secure way to earn interest while it’s not in use. The interest rate being offered by a savings account is the main indicator of how fast your account balance will grow. If you are not calculating the interest correctly, you could make the wrong choice about the high interest savings account that is right for your needs.

Compare interest rates below

$
$
months
Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees Min Bal / Min Deposit Interest Earned
ING DIRECT Savings Maximiser
Ongoing, variable 3.00% p.a. when you link to an ING Orange Everyday bank account and deposit $1,000+ each month. Available on balances up to $100,000.
3.00% 1.50% 1.50% $0 $0 / $0 Go to site More
Bankwest Hero Saver
Ongoing, variable 2.65% p.a. rate when you deposit at least $200 each month and make no withdrawals. Available on balances up to $250,000.
2.65% 0.01% 2.64% $0 $0 / $0 Go to site More
ME Online Savings Account
Ongoing, variable 3.05% p.a. rate when you link to a ME Everyday Transaction account and make a weekly purchase with your Debit MasterCard using tap & go. Available on balances up to $250,000.
3.05% 1.30% 1.75% $0 $0 / $0 Go to site More
Bank Australia Bonus Saver Account
Ongoing, variable 2.60% p.a. when you deposit at least $100 and make no withdrawals. Available on the entire balance.
2.60% 0.15% 2.45% $0 $0 / $1 Go to site More
Citibank Online Saver
Introductory rate of 2.85% p.a. for 4 months, reverting to a rate of 1.70% p.a. Available on balances below $500,000.
2.85% 1.70% 1.15% $0 $0 / $0 Go to site More
NAB Reward Saver
Ongoing, variable 2.55% p.a. when you make at least one deposit by the second last banking day of the month and make no withdrawals. Available on the entire balance.
2.55% 0.50% 2.05% $0 $0 / $0 Go to site More
Bank Australia Online Saver Account
Ongoing, variable rate up to 1.65% p.a. when you link to a Bank Australia Everyday Access or Pension Access or a mortgage offset account. Available on balances more than $5,000.
1.65% 1.65% 0.00% $0 $150,000 / $5,000 Go to site More
Bank Australia mySaver Account
Ongoing, variable 2.60% p.a. when you deposit $10+ each month and make no withdrawals. Available on balances $10+ and to customers under the age of 25.
2.60% 0.15% 2.45% $0 $0 / $10 Go to site More
HSBC Serious Saver
Introductory rate of 2.50% p.a. for 4 months, reverting to a rate of 1.60% p.a. Available on balances below $1,000,000.
2.50% 1.60% 0.90% $0 $0 / $0 Go to site More
NAB iSaver
Introductory rate of 1.90% p.a. for 4 months, reverting to a rate of 1.20% p.a. Available on balances below $20,000,000.
1.90% 1.20% 0.70% $0 $0 / $0 Go to site More
MyState Special eSaver Account
Ongoing, variable rate of 2.50% p.a. Available on a balance over $50,000.
2.50% 2.50% 0.00% $0 $0 / $0 Go to site More
ANZ Progress Saver
Ongoing, variable 1.81% p.a. when you deposit $10+ each month and make no withdrawals. Available on the entire balance.
1.81% 0.01% 1.80% $0 $10 / $10 Go to site More
Westpac eSaver
Introductory rate of 2.51% p.a. for 5 months, reverting to a rate of 1.00% p.a. Available on the entire balance.
2.51% 1.00% 1.51% $0 $0 / $0 Go to site More
BankSA Maxi Saver
Introductory rate of 2.75% p.a. for 3 months, reverting to a rate of 1.00% p.a. Available on the entire balance.
2.75% 1.00% 1.75% $0 $1 / $1 Go to site More
ANZ Online Saver
Introductory rate of 2.55% p.a. for 3 months, reverting to 1.00% p.a. Available on the entire balance.
2.55% 1.00% 1.55% $0 $0 / $0 Go to site More
Bank of Melbourne Maxi Saver
Introductory rate of 2.75% p.a. for 3 months, reverting to 1.00% p.a. Available on the entire balance.
2.75% 1.00% 1.75% $0 $1 / $1 Go to site More
BankSA Incentive Saver Account
Ongoing, variable 1.75% p.a. when you make at least one deposit each month and no withdrawals. Available on the entire balance.
1.75% 0.01% 1.74% $0 $0 / $0 Go to site More
Bank of Melbourne Incentive Saver
Ongoing, variable 1.75% p.a. when you make at least one deposit and no withdrawals each month. Available on the entire balance.
1.75% 0.01% 1.74% $0 $1 / $1 Go to site More
Westpac Reward Saver
Ongoing, variable 1.75% p.a. when you deposit at least $50 and make no withdrawals each month. Available on the entire balance.
1.75% 0.01% 1.74% $0 $0 / $0 Go to site More
HSBC Flexi Saver Account
Ongoing, variable 2.00% p.a. when you deposit $300+ each month (other conditions apply). Available on balances up to $5,000,000.
2.00% 1.50% 0.50% $0 $0 / $0 Go to site More
$
Monthly Account Fee Debit Card Access ATM Withdrawal Fee Fee Free Deposit p.m. Details
NAB Classic Banking
$0 monthly account fees.
Tap and pay with your NAB Visa Debit card, NAB Pay for Android or NAB PayTag for iPhone.
Visa $0 $0 $0 account keeping fees with no deposit conditions. Unlimited free withdrawals at NAB and rediATMs. Go to site More
ING DIRECT Orange Everyday Account
$75 cash bonus & Apple Pay available.
Get a competitive ongoing variable rate when linked with an ING Direct Savings Maximiser.
Visa $0 $1,000 $0 monthly account keeping fees. Unlimited free withdrawals at any ATM in Australia if you deposit $1,000 each month. Go to site More
ANZ Access Advantage
Apple Pay, Android Pay & ANZ Mobile Pay.
Take advantage of Apple Pay by linking your ANZ Visa Debit card to an eligible iPhone and seamlessly pay for purchases with your phone.
Visa $0 $2,000 $0 account keeping fees if you deposit at least $2,000 per month. Otherwise, a $5 monthly fee applies. Unlimited free withdrawals at ANZ ATMs. Go to site More
HSBC Day to Day Transaction Account
Your Visa debit card unlocks special privileges worldwide with the HSBC home&Away Privilege Program.
Visa $0 $0 $0 account keeping fees. Unlimited free withdrawals at over 3,000 HSBC, Westpac, St.George, Bank of Melbourne and BankSA ATMs. Go to site More
BankSA Complete Freedom Account
Open one in less than 5 minutes with Cardless Cash available.
Visa $0 $2,000 $0 account keeping fees if you deposit at least $2,000 per month. Otherwise, a $5 monthly fee applies. Unlimited free withdrawals at BankSA, St.George, Westpac and Bank of Melbourne ATMs. Go to site More
St.George Complete Freedom Account
10% Cash back for online gaming purchases.
Waived account keeping fees when minimum deposit is met with no minimum balance.
Visa $0 $2,000 $0 account keeping fees if you deposit at least $2,000 per month. Otherwise, a $5 fee applies. Unlimited free withdrawals at St.George, Westpac and BankSA ATMs. Go to site More
BankSA Express Freedom Account
Get Cardless Cash, free SMS and email alerts.
Visa $0 $1,000 $0 account keeping fees when you deposit at least $1,000 into your account each month. Otherwise, a $3 monthly fee applies. Unlimited Free withdrawals at BankSA, St.George, Bank of Melbourne and Westpac ATMs. Go to site More
Westpac Choice
$0 ATM withdrawal fee at 50,000+ ATMs globally.
Via Westpac's Global ATM Alliance. Get Cash without your debit card (conditions apply).
Mastercard $0 $2,000 $0 account keeping fees if you deposit at least $2,000 per month. Otherwise, a $5 monthly fee applies. Unlimited free withdrawals at St.George, Westpac, Bank of Melbourne and BankSA ATMs. Go to site More
Bank of Melbourne Complete Freedom
Get Cardless cash and shop securely with your Visa debit card. Customise SMS and email alerts.
Visa $0 $2,000 $0 account keeping fees if you deposit at least $2,000 per month. Otherwise, a $5 monthly fee applies. Unlimited free withdrawals at Bank of Melbourne, St.George, Westpac and BankSA ATMs. Go to site More
Bank of Melbourne Express Freedom
Get Cardless Cash and PAYG branch and cheque services.
Visa $0 $1,000 $0 account keeping fees if you deposit at least $1,000 per month. Otherwise, a $3 monthly fee applies. Unlimited free withdrawals at BankSA, St.George, Westpac and Bank of Melbourne ATMs. Go to site More
$
Name Product 3 Mths p.a. 4 Mths p.a. 6 Mths p.a. 12 Mths p.a. 24 Mths p.a. 36 Mths p.a. 48 Mths p.a. 60 Mths p.a. Min Deposit Interest Earned
Citibank Term Deposit $75,000
-
-
2.80%
-
-
-
-
-
$75,000
Citibank Term Deposit $250,000
-
-
3.00%
-
-
-
-
-
$250,000
ME Term Deposit
2.50%
2.50%
2.70%
2.85%
3.00%
3.00%
3.00%
3.00%
$1,000
St.George Term Deposit
2.10%
1.85%
2.20%
2.55%
2.60%
2.60%
2.70%
2.95%
$1,000
BankSA Term Deposit
2.10%
1.85%
2.20%
2.55%
2.60%
2.60%
2.70%
2.95%
$1,000
Bank of Melbourne Term Deposit
2.10%
1.85%
2.20%
2.55%
2.60%
2.60%
2.70%
2.95%
$1,000
Bankwest Online Term Deposit
2.35%
1.50%
2.55%
2.55%
2.60%
2.60%
2.65%
2.65%
$1,000

Compare up to 4 providers

How does an interest rate comparison work?

When interest is calculated, when it is deposited and if the account allows for compound interest will all be determining factors when comparing interest rates. If you are not looking at the entire interest picture for savings accounts, you could be missing key points that will determine your interest earning capacity.

How are interest rates calculated on my high interest savings account?

Interest on an online saving account is calculated by this formula: Daily closing balance/365 x Interest rate/100

If you are comparing high interest savings accounts and wondering about the significance of having the interest calculated daily and paid monthly, it basically means you will earn more interest. When interest is calculated daily, it is calculated on compounding interest.

To calculate what the rate on their savings and term deposit accounts will be, most banks will base their rate on the RBA's cash rate. Some banks will add a certain percentage to the standard rate for a promotional period, or lock in a rate several percentage points higher than the cash rate on a term deposit account.

Learn more about how compound interest affects your savings account.

How do I actually compare interest rates?

Don’t stop at the advertised interest rate when making savings accounts comparisons. There are various points to consider that will help you determine which savings account is best for you.

  • The base rate. The standard interest rate is where your comparison should start. Check to see if it is variable or fixed and how it compares against other savings accounts.
  • Bonus rates. Some banks will offer an introductory bonus rate on a savings account. This rate is usually advertised as a fixed rate on top of the standard. Check to see for how long that rate is in effect, and if you need to meet any requirements in order to maintain it.
  • Compound interest. Ideally you want a high interest savings account where interest is calculated daily and paid into the account monthly. This allows you to grow your savings faster by being paid for interest that you have already earned.
  • Terms. Check to see if the interest rate is only applied if you are able to meet certain conditions, such as maintain a minimum balance or make a limited number of withdrawals.
Tips for comparing interest rates
  • Choose the interest rate which suits your savings goal – If a high introductory interest rate expires in 4 months' time but you can save for your new TV or summer holiday before then, you can take advantage of the high rate and not worry about the lower standard rate.
  • Compare promotional and introductory interest rates – If a savings account has a promotional rate, it is important you compare both this rate, and the account's standard rate. While an account may have a higher initial rate, if you can find a higher standard rate on another account, you could be better off in the long term.
  • Look for flexibility – Interest rates are predicted to keep going up for a while longer, which means that if you are locking in a term deposit account, look for an interest rate which is not likely to be exceeded by those of online savings accounts in the next few months. Or choose a term deposit account which lets you upgrade your interest rate, or withdraw for an early exit to a better investment option.
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Any pros and cons?

Pros

Interest rates are not the only important feature for a savings account. When making your comparisons check for:

  • Linked account. Savings accounts typically need to be linked to a transaction account in order to facilitate the transfer of funds. Check to make sure that by opening a savings account in a different bank, you can still use your current transaction account to link them.
  • Bonus rates. An introductory bonus rate on interest can give you a big boost towards meeting your savings goals.
  • Security. Ensure that the financial institution is a part of the Australian Government Guarantee Scheme, which protects your deposits of up to $250,000 per person per institution.

Cons

  • Fees and penalties. Certain monthly fees could apply to saving account products as well as penalties for early withdrawals. Read the fine print carefully to ensure that you are not losing the benefit of a high interest savings account in other charges.
  • Balance requirements. You might be expected to open the account with a certain amount of funds, or have to maintain a minimum balance in order to avoid fees.
Tax implications in Australia

Any interest earned on a savings account in an Australian institution is taxable as income in the country, unless exempted by the ATO. This includes earnings on children's savings accounts, term deposits, and life insurance bonuses. However, you can claim deductions on expenses tied to earning the income. This can include account-keeping fees from the bank, management fees, or financial consultations. If you do not give your tax file number to your bank, an amount corresponding to the highest tax bracket will be withheld, but you will get a refund for the difference, if any, once you provide the number.

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What are the risks?

You could easily not meet your savings potential by not weighing the type of savings account and the interest rate carefully. In order to avoid this, make sure that you are:

  • Choosing the right account. If you are savings towards a goal that is a few years off, you’ll get the highest return with a term deposit account.
  • Not mistaking a bonus rate for the standard. Check the advertised rate carefully, as this may just be the introductory or bonus interest. The standard rate is what will be applied after the bonus period ends.

Frequently asked questions

What other factors could affect the amount of money I earn in interest from my savings account?

The biggest factor is fees, which can come from the savings account itself, or the required linked account. Other costs to consider are penalties for early withdrawals and bank transaction fees.

Do rates change depending on my balance?

With some accounts the rates will be different depending on how much money you have in savings.

How is interest calculated?

For high interest savings accounts, the interest should be calculated daily and paid into the account monthly in order for you to get the benefit of compound interest. This is where you are earning on the principal amount as well as any interest payments already received.

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Related Posts

Savings Account Offers

Learn about our information service
ING DIRECT Savings Maximiser

Maximum Variable Rate

3.00

Standard Variable Rate

1.50
ME Online Savings Account

Maximum Variable Rate

3.05

Standard Variable Rate

1.30
Bankwest Hero Saver

Maximum Variable Rate

2.65

Standard Variable Rate

0.01
Citibank Online Saver

Maximum Variable Rate

2.85

Standard Variable Rate

1.70

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