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.

Best Savings Account Offer

RaboDirect High Interest Savings Account

3.05 % p.a.

max rate

1.80 % p.a.

standard variable rate

Best Savings Account Offer

Introductory rate of 3.05% p.a. for 4 months, reverting to a rate of 1.80% p.a. Available on balances below $250,000

  • Maximum Rate: 3.05% p.a.
  • Standard Variable Rate: 1.80% p.a.
  • Introductory period: 4 months
  • Monthly fees: $0.00
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Promoted

Compare interest rates below

Rates last updated October 23rd, 2018
$
$
months
Name Product Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees Min Bal / Min Deposit Interest Earned Product Description
RaboDirect High Interest Savings Account
3.05%
1.80%
1.25%
$0
$0 / $1
Introductory rate of 3.05% p.a. for 4 months, reverting to a rate of 1.80% p.a. Available on balances below $250,000
UBank USaver
2.87%
1.81%
1.06%
$0
$0 / $0
Earn up to 2.87% p.a. by linking your USaver account to a UBank Ultra transaction account and transferring at least $200 per month into either account. This offer is available on balances up to $200,000.
Citibank Online Saver
3.05%
1.70%
1.35%
$0
$0 / $0
Introductory rate of 3.05% p.a. for 4 months, reverting to a rate of 1.70% p.a. Available on balances below $500,000.
AMP Saver Account
2.55%
2.10%
0.45%
$0
$0 / $0
Introductory rate of 2.55% p.a. for 4 months, reverting to a rate of 2.10% p.a. Available on balances below $5,000,000.
HSBC Flexi Saver Account
2.50%
1.25%
1.25%
$0
$0 / $0
Ongoing, variable 2.50% p.a. when you deposit $300+ each month (other conditions apply). Available on balances up to $5,000,000.
HSBC Serious Saver
3.10%
1.40%
1.70%
$0
$0 / $0
Introductory rate of 3.10% p.a. for 4 months, reverting to a rate of 1.40% p.a. Available on balances below $1,000,000.

Compare up to 4 providers

Rates last updated October 23rd, 2018
$
Name Product Debit Card Access ATM Withdrawal Fee Fee Free Deposit p.m. Monthly Account Fee Product Description
NAB Classic Banking
Visa
$0
$0
Enjoy convenient, unlimited access to your money.
$0 monthly account fee.
Tap and pay with your NAB Visa Debit card, NAB Pay for Android or NAB PayTag for iPhone. Temporarily block your card at the touch of a button if you lose it.
HSBC Everyday Global Account
Visa
$0
$0
No foreign ATM or transaction fees.
$0 monthly account fee.
Enjoy no minimum ongoing balance or transaction requirements and the flexibility to hold up to 10 currencies. Apple Pay and Google Pay available.
ING Orange Everyday Account
Visa
$0
$0
No fees for any ATM in Australia or overseas.
$0 monthly account fees.
Enjoy $0 ATM withdrawal fees when you deposit $1000 and make 5+ card purchases per month. Get a competitive ongoing variable rate when linked with the ING Savings Maximiser.
NAB Classic Banking with Platinum Visa Debit Card
Visa
$0
$0
$10 cashback on contactless purchases, $0 foreign transaction fee and complimentary travel insurance.
$10 monthly account fee.
Receive $10 cashback when you spend $1000 on contactless purchases. Complimentary travel insurance, transport accident insurance, purchase protection insurance and more when you meet eligibility criteria.
Citi Global Currency Account
Mastercard
$0
$0
Hold up to 10 currencies.
$0 monthly account fee.
Enjoy one linked debit card to hold up to 10 currencies and receive foreign currencies for free. Earn up to 2.25% p.a. interest on your AUD balance.
AMP Bett3r Account - Pay Account
Visa
$0
$2,000
Earn 1.50% interest. Manage your budget effectively with a bundle of accounts.
$5 waivable monthly account fee.
Earn 1.50% interest on your balance. Monthly account fee waived if you deposit at least $2,000 a month from a source that is not another AMP bank account. Enjoy linked individual Pay, Spend and Save accounts to reach your savings goals.
UBank USaver Ultra Transaction Account
Visa
$0
$0
Earn up to 2.87% p.a. interest on your linked savings account.
$0 monthly account fee.
You must open the UBank USaver savings account in order to get this account. Enjoy access to ATMs in Australia and overseas for free and a 0% foreign exchange fee for online purchases. Manage your spending with a built-in sweep facility that automatically moves money between your linked accounts based on the limits you set.
MyState Everyday Account
Visa
$0
$2,000
A flexible option for day-to-day spending.
$6 waivable monthly account fee.
Monthly account fee waived if you deposit at least $2,000 a month or are 23 years or under. Apple Pay, Google Pay, Samsung Pay available.
HSBC Day to Day Transaction Account
Visa
$0
$0
Open an account and easily switch your regular payments over from your current bank.
$0 monthly account fee.
Through your linked Visa debit card, you can access exclusive shopping, travel and restaurant deals here and abroad through HSBC's home&Away Privilege Program.

Compare up to 4 providers

Rates last updated October 23rd, 2018
$
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. Min Deposit Interest Earned
Citibank Term Deposit
2.60%
-
2.80%
3.00%
-
-
$100,000
Macquarie Bank Term Deposit
2.50%
2.50%
2.55%
2.60%
2.60%
2.65%
$10,000
UBank Term Deposit Account
2.70%
2.70%
2.75%
2.75%
-
-
$1,000
AMP Term Deposit $100,000+
2.45%
2.50%
2.75%
2.75%
2.85%
2.85%
$100,000
ME Term Deposit
2.60%
2.60%
2.80%
2.80%
2.85%
3.00%
$1,000
RACQ Bank Term Deposit
2.35%
2.60%
2.55%
2.70%
2.70%
2.80%
$1,000
MyState Bank Online Term Deposit
2.50%
2.35%
2.55%
2.75%
2.80%
-
$5,000
Firstmac Term Deposit
2.55%
-
2.75%
2.65%
2.75%
-
$5,000
AMP Term Deposit $25,000+
2.45%
2.50%
2.75%
2.75%
2.85%
2.85%
$25,000
AMP Term Deposit $5000+
2.25%
2.30%
2.55%
2.55%
2.65%
2.65%
$5,000

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.

FAQs

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

Important Information*
RaboDirect High Interest Savings Account

Maximum Variable Rate

3.05

Standard Variable Rate

1.80
Citibank Online Saver

Maximum Variable Rate

3.05

Standard Variable Rate

1.70
AMP Saver Account

Maximum Variable Rate

2.55

Standard Variable Rate

2.10
HSBC Serious Saver

Maximum Variable Rate

3.10

Standard Variable Rate

1.40

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