What is APR?

Annual Percentage Rate or APR refers to the interest you may earn or pay on a financial product each year (or “per annum” in Latin). In everyday Australian English, APR is often referred to simply as your interest rate. This means the savings account with the best APR will typically be the one with the best interest rate, though that doesn’t always mean it will be the best savings account overall.

You may find references to the APR of a savings account or other financial product when you go through its fine print or terms and conditions, or when you’re reading financial information from overseas locations such as the USA and the UK.

Find and compare some of the best APR savings accounts

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1.35%

Intro 4 months then 0.35%

0.35%

Citi

Gold Award Winner 2020

$5.6

$128.9

2.95

/ 5
More details

1.60%

Intro 4 months then 0.80%

0.80%

Heritage Bank

$6.7

$152.9

3.34

/ 5
More details

1.00%

1.00%

AMP Bank

$4.2

$95.3

3.32

/ 5
More details

0.70%*

0.01%

ANZ

$2.9

$66.7

2.97

/ 5
More details

0.65%

Intro 3 months then 0.05%

0.05%

ANZ

$2.7

$61.9

2.47

/ 5
More details

0.10%

0.10%

Police Bank

$0.4

$9.5

2.64

/ 5
More details

0.05%

0.05%

NAB

$0.2

$4.8

2.54

/ 5
More details

0.05%

0.05%

Newcastle Permanent

$0.2

$4.8

2.56

/ 5
More details

0.01%

0.01%

People's Choice Credit Union

$0

$1

2.51

/ 5
More details

0.65%*

0.35%

People's Choice Credit Union

$2.7

$61.9

2.96

/ 5
More details

0.85%*

0.10%

Police Bank

$3.5

$81

3.24

/ 5
More details

1.80%*

0.50%

Police Bank

$7.5

$172.1

4.12

/ 5
More details

0.05%

0.05%

BankSA

$0.2

$4.8

2.55

/ 5
More details

0.10%

0.10%

Geelong Bank

$0.4

$9.5

2.63

/ 5
More details

1.10%*

0.10%

Australian Military Bank

$4.6

$104.9

3.41

/ 5
More details

0.05%

0.05%

IMB Bank

$0.2

$4.8

2.53

/ 5
More details

0.15%

0.15%

MyState Bank

$0.6

$14.3

2.64

/ 5
More details

0.01%

0.01%

Commonwealth Bank of Australia

$0

$1

2.50

/ 5
More details

0.75%

0.75%

Teachers Mutual Bank

$3.1

$71.4

3.26

/ 5
More details

Learn more about savings accounts

APR and savings accounts

The APR or interest rate on your savings account is used to work out how much money you can earn in interest on the wealth you deposit in the account.

The base rate is the minimum interest you’ll earn on your deposit. However, many banks offer higher interest rates for a limited time as an introductory bonus, or for as long as you can fulfil certain terms and conditions, such as making regular deposits, or avoiding withdrawals.

The more money you can keep deposited in a savings account, and the longer you can keep it there while fulfilling the bank’s terms and conditions, the more interest you can potentially earn on your savings.

Is the savings account with the highest APR the best savings account?

While you may be tempted to immediately sign up with whichever bank is offering the savings account with the highest APR, that’s no guarantee it will be the best savings account option for you.

Some banks charge upfront or ongoing fees on their savings accounts. If it looks like you may pay more in fees on a particular savings account than you may earn in interest, then this may not be the best savings account option for you.

Similarly, if it’s unlikely you’ll be able to easily fulfil the terms and conditions required to receive the maximum interest rate from your savings account, you may prefer an account that lets you earn more interest while you stick to your regular saving patterns.

Be sure to compare different savings accounts with different APRs before making your decision.

Frequently asked questions

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.

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.

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.

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.

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

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

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.

Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

  • Personal details, including identification (driver’s license, passport etc.)
  • Tax file number
  • Employment details

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.

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. 

What is a good interest rate for a savings account?

A good rule of thumb to keep in mind with savings accounts is to look for a rate that is higher than the CPI inflation rate. This number is constantly changing, so check the Reserve Bank of Australia’s page. If you aren’t earning interest above this then the value of your money will go backwards over time.

Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

How can I get a $4000 loan approved?

While personal loans and medium amount loans don’t offer guaranteed approval, there are steps you can take to help increase the likelihood of your application being approved, including:

  • Fulfilling the eligibility criteria (providing ID, proof of residency, proof of income etc.)
  • Checking your credit history (you can order one free copy of your credit file per year, and make sure that there aren’t any errors that may be bringing down your credit score)
  • Comparing carefully before applying (making multiple loan applications can mean having your credit checked multiple times, which can look bad to some lenders and reduce your chances of being approved by them)

Can you direct deposit to a savings account?

Yes. You can make one off payments or set up regular direct deposits into a savings account. This can be organised easily through online banking or by making deposits in a branch. Talk to your lender to find out the easiest way for you to set up direct deposits.