Are savings accounts free?

Are savings accounts free?

They say there’s no such thing as a free lunch, and the same can be said about savings accounts.

While many savings accounts in Australia will not sting you with ongoing monthly fees, you’ll still potentially have to jump through hoops to keep your account and earn the highest bonus rate.

So, can a savings account ever truly be free? And how do you ensure your savings account is working its hardest for your rainy-day fund? Here is everting you need to know about keeping costs down on savings accounts.

Is a savings account really free?

At the end of the day, a savings account is still a financial product offered by a provider. These providers, whether traditional banks or online competitors, need to make money.

While your savings account provider cannot necessarily charge you interest for having an account, like one would with a loan or credit card, it can earn its profits from charging you fees and ongoing costs.

Typically, the older financial institutions will carry greater fees and lower interest rates. Newer, online-or-app-based providers are able to keep overheads low by not paying for expenses like branches, and therefore generally offer higher interest rates and lower fees. This is not a hard-and-fast rule and can depend on the institution and the type of account. But it is worth keeping in mind when doing your savings account research.

What savings account fees are there?

There are a range of savings account fees you may he hit with, depending on your provider and the account type you choose. These include:

  • Account keeping fees
  • ATM fees
  • Withdrawal fees
  • Overdraw fees
  • Foreign transaction fees, such as currency conversion fees 

You may be hit with one more of these fees for transferring, withdrawing or direct debiting your savings.

If you’re unsure just what fees you may be facing with your current savings account, hop online and take a look at your providers’ website. There you’ll be able to see the Product Disclosure Statement (PDS), which should outline any potential fees and costs, as well as the base rate and maximum rate earned on your account.

What other ‘costs’ can a savings account have?

It’s not just fees that you’ll need to look out for with a savings account, but the other ways your provider will make you pay for your account - aka conditions. Jumping through various hoops for a savings account provider is one way you ultimately have to “pay” for your account, regardless of the fees charged. 

Some savings accounts come with conditions that need to be met by the account holder in order to receive the highest bonus interest rate possible. While you can simply ignore these conditions, or just look to introductory savers with low base rates and no bonus rate criteria, you may miss out on the most fundamental part of a savings account: earning a high return.

The highest interest rates are reserved for savers who meet all of a provider’s conditions. These may include:

  • Depositing a minimum amount each month into your savings;
  • Keeping your savings balance above a minimum amount;
  • Making no withdrawals or direct debits to your savings;
  • Having linked financial products, such as everyday transaction accounts; and
  • Keeping minimum balances or account deposits each month in said linked accounts. 

By opening linked transaction accounts with your provider, you’ll also run the risk of being stung with a whole new raft of fees for said transaction accounts. Further, to meet some conditions, you’ll effectively need to overhaul your entire personal finances, such as having your income deposited into your new linked bank account, setting up direct deposits each month into your savings account and budgeting accordingly.

While these conditions aren’t necessarily a difficult thing to meet, you are still paying for your savings account by bolstering the providers books by opening more accounts and keeping a higher account balance than you otherwise would have.

How do I keep costs as low as possible on my savings account?

With all that being said, there are ways you can keep costs low on your savings account. This includes: 

  • Introductory (standard) savings accounts

This type of savings account does not typically come with conditions that need to be met. You will earn a competitive rate for a set period of time at the start, but your interest rate will then revert to a lower, standard variable rate for the time you have the account. This is a more set-and-forget kind of savings tool.

  • Do your research

One of the best ways to keep fees low and choose manageable conditions is to do your research before choosing a savings account. Simply staying with the same account you’ve had since you were a kid may mean you’ve never done your due diligence about checking for fees or even seeing if there are higher interest rates available on the market. 

Use comparison tools, such as tables, to filter down and compare savings account options. You’ll be able to expand the ‘more details’ section to see a breakdown of any potential fees charged. As many accounts charge minimum, if any, fees at all, this is a helpful way of weaning out high-fee accounts. 

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Fact Checked -

This article was reviewed by Senior Journalist Tony Ibrahim before it was published as part of RateCity's Fact Check process.



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Learn more about savings accounts

What is an ANZ locked savings account?

An ANZ locked savings account locks your money and prevents you from spending. You may use a standard savings account as the account where your salary is deposited. You can then withdraw funds when needed, but aren’t able to make purchases with it. However, this account may not grow much as the continual withdrawing of funds will limit the interest you can earn.

With a locked savings account in ANZ, you know your savings will grow because you can’t access the money. You can also qualify for a bonus when you deposit at least $10 per month and don’t make any withdrawals. To help you with this further you can set up an automatic transfer from your regular ANZ savings or transaction account so you don’t forget to make a monthly deposit.

Your ANZ locked savings account offers you a base interest rate of 0.1 per cent per annum plus an additional bonus interest of 0.49 per cent per year. The interest is calculated daily and credited to your account on the last working day of the month.

Should I open a Commonwealth locked savings account?

If you have trouble saving money, a Commbank locked savings account could be a potential solution. A locked savings account won’t let you make withdrawals and as such, it can help you grow your savings balance if you keep topping it up. 

The Commonwealth locked savings account advertises high-interest rates and minimal maintenance fees, along with a host of other incentives that will encourage you not to touch the money. 

The account offers a higher interest rate for each month that you make limited or no withdrawals, as well as regular deposits. 

To qualify for a Commonwealth locked savings account with the advertised features, you will need to fulfil specific criteria such as:

  • Depositing a fixed minimum amount into the account every month.
  • Making a fixed number of deposits each month.
  • Making a minimum or no withdrawals each month.
  • Maintaining a minimum account balance.

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

Can you set up direct debits from a savings account?

It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

Some transaction accounts allow you to set up direct debits and also earn interest, though you may not enjoy as much flexibility as a dedicated transaction account, or get as high an interest rate as a dedicated savings account.

Can you have multiple ING savings accounts?

Yes, you can open up to nine accounts with ING at any particular time. If you’re saving money for various goals, such as buying a car or taking a holiday, you can name each of your multiple ING savings accounts differently.

To get a Savings Maximiser account, you’ll need to deposit more than $1000 every month and make at least five additional purchases. If you also want to grow your savings, from 1st March 2021, you can earn up to 1.35 per cent per annum variable interest on one account with a balance of up to $100,000 when you also maintain an Orange Everyday account.

With ING, multiple savings accounts can help keep track of all your savings goals. All the accounts offer flexible withdrawals where you can withdraw as low or as high as you want without impacting your earning interest rate. However, you can only earn the bonus interest on one account. To apply for a Savings Maximiser account, you can visit

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.

How much money should I have in my savings account?

A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

Should I open multiple savings accounts with UBank?

UBank offers customers an opportunity to make the most of their savings by opening multiple savings accounts. Having multiple savings accounts with UBank may be ideal for savers tracking different goals in separate accounts. 

It’s important to note that to earn bonus interest, you will still need to meet the conditions of the UBank savings account every month. If you don’t make these deposits, you will receive the standard interest rate, which is typically lower. 

Keep in mind that you won’t earn bonus interest on your UBank savings account in the month an account is opened and if you open multiple savings accounts with UBank, you'll start earning any bonus interest the following month. 

It's also not yet known how long the special interest rate will hang around for, so please check with your bank for more information. 

What are the two types of NAB locked savings accounts?

With a locked savings account in NAB, you can earn bonus interest and learn financial discipline. NAB offers two types of locked savings accounts, each with their own terms and conditions.

The NAB Reward Saver account pays a variable base interest rate of 0.05 per cent per annum and a bonus interest of 0.55 per cent. You’re eligible for the bonus if you make a minimum of one deposit on or before the second last banking day and have no withdrawals in the month.

Meanwhile, the NAB iSaver account provides 0.05 per cent as the standard base interest rate and a fixed bonus margin of 0.55 per cent during the first four months from the date of opening the account. You can park your cash in the account and enjoy unlimited monthly transfers between linked daily bank accounts without impacting the interest rate.

What is a Westpac locked savings account?

The Westpac locked savings account (also known as "Westpac Life") can help customers reach savings goals faster through bonus interest. Customers receive 0.2 per cent standard base interest with a variable bonus rate of 0.35 per cent when the closing balance at the end of the month is higher than the opening balance.

There are some conditions to earn the bonus interest on Westpac's locked savings account, though. First, you’ll need to increase the balance each month either through a deposit or not making any withdrawals, and then link it to a Westpac Choice account and make at least five eligible payments using your debit card. Please consult your bank as to what an eligible payment is. 

What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

Can you set up a savings account online?

Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

Online-only savings accounts are often less expensive than other savings accounts, though they may not offer the same flexibility, features, or face-to-face service as more traditional savings accounts.