Get the highest interest on your savings
Savings accounts help your money grow faster by offering a higher interest rate than everyday transaction accounts. Savings accounts usually earn more interest than other accounts. They’re usually online, and don’t have a debit card, so it’s not as easy to dip into your money.
Higher interest rate
The higher the interest rate, the faster your hard-earned savings will grow.
A competitive savings account will offer an interest rate of around 1.5%. A transaction account will usually have an interest rate between 0% and 0.5%.
This means your savings will grow faster in a savings account.
See how your money can grow with different interest rates.
Bonus interest rates
Many savings accounts offer a bonus interest rate if you meet certain conditions. For example, if you make regular deposits of $500 per month, or keep a minimum balance of $5,000.
Honeymoon interest rates
Some banks offer a higher interest rate for a short period of time, called a honeymoon interest rate. Always check what the interest rate will be after the honeymoon period ends.
The best option is a no-fee savings account — you don’t want account fees to eat up your savings.
To open a savings account with some providers, you will also need to open a linked transaction account. This makes it easier to transfer money between the accounts.
Government deposit guarantee
Savings accounts are a low-risk investment. They are protected by the Australian Government’s financial claims scheme. This guarantees to pay you up to $250,000 for savings deposits in the unlikely event your bank, credit union or building society fails. This guarantee applies per person and per institution.
Visit the Financial Claims Scheme to find the institutions and deposits the scheme covers.
Compare savings accounts
Before you open a savings account:
- Compare accounts from different providers so you can find the best one for you.
- Check that the provider is an authorised deposit-taking institution.
Comparison websites can be useful, but they are businesses and may make money through promoted links. They may not cover all your options. See what to keep in mind when using comparison websites.
Compare these features:
- what the interest rate is
- how often it’s paid
- if it has a bonus or honeymoon interest rate, and what the conditions are
- monthly account fee
- if you need to keep a minimum balance
- the maximum you can save in your account
- if you need a linked transaction account with the same provider
- how often you can withdraw money
- if you need to make regular deposits, and how much
Review regularly for a better interest rate
Review your savings account regularly. Compare it to others on the market to make sure you’re getting the best interest rate.
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/banking/savings-accounts
Important note: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. Past performance is not a reliable guide to future returns.
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