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$

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Online Partner

Show Online Partners Only?

We provide links to our Online Partners. If you click through to an Online Partner, you can get more product information, apply for or purchase the product and RateCity may earn a fee for referring you. This is one of the ways RateCity makes money and how we can offer our comparison service to you for free. See how we make money for more.

Product

Future Saver Account (Under 35)

Real Time Rating™

4.65

/ 5
Maximum rate

3.00%*

% p.a

Base rate

0.05

% p.a

Company
Maximum monthly interest

$39

Total interest earned

$289

Real Time Rating™

4.65

/ 5
Go to site

Deposit $1000 minimum monthly deposit into your linked Everyday Account and make 5 or more eligible transactions.

Product

Virgin Money Boost Saver (< 18 years)

Real Time Rating™

4.33

/ 5
Maximum rate

2.60%*

% p.a

Base rate

0.05

% p.a

Company
Maximum monthly interest

$34

Total interest earned

$250

Real Time Rating™

4.33

/ 5
Go to site

The maximum rate is made up of the variable Base rate of 0.05%p.a., Bonus rate of 2.25%p.a. and the Notice Interest Rate of 0.30%p.a. If you are between 14 - 17 years, no Monthly Criteria apply in order to earn the Bonus Interest Rate of 2.25%. To receive additional interest rate of 0.3%, the optional Lock Saver Feature must be enabled on your App. Provide 32 days’ advance notice to unlock your account or withdraw your money.

Product

Virgin Money Boost Saver (18-24 years)

Real Time Rating™

4.33

/ 5

Winner of Best Savings Account Young Adults, RateCity Gold Awards 2022

Maximum rate

2.60%*

% p.a

Base rate

0.05

% p.a

Company
Maximum monthly interest

$34

Total interest earned

$250

Real Time Rating™

4.33

/ 5
Go to site

special

Deposit $2,000 or more into your Virgin Money Go Account from an external account and make at least 5 debit card purchases, direct debit or BPAY payments in the previous month.

The maximum rate is made up of the variable Base rate of 0.05%p.a., Bonus rate of 2.25%p.a. and the Notice Interest Rate of 0.30%p.a. To receive bonus interest of 2.25%, deposit $1,000 or more into your Virgin Money Go Account from an external account, and make at least 5 debit card purchases, direct debit or BPAY payments in the previous month. To receive additional interest rate of 0.3%, the optional Lock Saver Feature must be enabled on your App. Provide 32 days’ advance notice to unlock your account or withdraw your money.

Winner of Best Savings Account Young Adults, RateCity Gold Awards 2022

Product

Virgin Money Grow Saver

Real Time Rating™

3.78

/ 5
Maximum rate

1.80%*

% p.a

Base rate

0.05

% p.a

Company
Maximum monthly interest

$23

Total interest earned

$173

Real Time Rating™

3.78

/ 5
Go to site

The maximum rate is made up of the variable Base rate of 0.05%p.a., Bonus rate of 1.45%p.a. and the Notice Interest Rate of 0.30%p.a. To receive bonus interest of 1.45%, make at least 1 deposit into your Grow Saver and make no more than 1 withdrawal (including any internal transfers or Pay Someone transfers) out of your Grow Saver each month. To receive additional interest rate of 0.3%, the optional Lock Saver Feature must be enabled on your App. Provide 32 days’ advance notice to unlock your account or withdraw your money.

Product

Smart Saver Account

Real Time Rating™

4.24

/ 5
Maximum rate

2.35%*

% p.a

Base rate

0.05

% p.a

Company
Maximum monthly interest

$30

Total interest earned

$226

Real Time Rating™

4.24

/ 5
Go to site

Deposit $1000 minimum monthly deposit into your linked Everyday Account and make 5 or more eligible transactions.

Product

Savings Maximiser

Real Time Rating™

4.59

/ 5

Winner of Best Savings Account Young Adults, Best Savings Account Regular Savers, RateCity Gold Awards 2022

Maximum rate

3.10%*

% p.a

Base rate

0.55

% p.a

Company
Maximum monthly interest

$40

Total interest earned

$299

Real Time Rating™

4.59

/ 5
Go to site

Customers must complete the following each month: 1. Deposit at least $1,000 from an external source; 2. Make 5+ settled card purchases; and 3. Grow the balance on the nominated Savings Maximiser account – i.e. make sure there’s more in the account at the end of the month (excluding interest) than there was at the end of the previous month.

Winner of Best Savings Account Young Adults, Best Savings Account Regular Savers, RateCity Gold Awards 2022

Product

Kids Saver

Real Time Rating™

4.90

/ 5
Maximum rate

3.50%*

% p.a

Base rate

1.00

% p.a

Company
Maximum monthly interest

$45

Total interest earned

$338

Real Time Rating™

4.90

/ 5
Go to site

when at least $5 per month is deposited and no withdrawals made

Product

Growth Saver Account

Real Time Rating™

4.31

/ 5
Maximum rate

2.50%*

% p.a

Base rate

0.10

% p.a

Company
Maximum monthly interest

$32

Total interest earned

$240

Real Time Rating™

4.31

/ 5
Go to site

Bonus interest rate applied on balances up to $25,000 when the account holder makes a minimum deposit of $200 and no withdrawals within a calendar month. Otherwise base interest rate will apply

Product

Active Saver

Real Time Rating™

4.22

/ 5
Maximum rate

2.50%*

% p.a

Base rate

0.01

% p.a

Company
Maximum monthly interest

$32

Total interest earned

$240

Real Time Rating™

4.22

/ 5
Go to site

Deposit $250 and make no withdrawals each month.

Product

Simple Saver Account

Real Time Rating™

4.03

/ 5
Maximum rate

1.50

% p.a

intro 4 months then 1.00%

Base rate

1.00

% p.a

Company
Maximum monthly interest

$35

Total interest earned

$187

Real Time Rating™

4.03

/ 5
Go to site
Product

Goal Saver

Real Time Rating™

4.07

/ 5
Maximum rate

2.15%*

% p.a

Base rate

0.10

% p.a

Company
Maximum monthly interest

$28

Total interest earned

$206

Real Time Rating™

4.07

/ 5
Go to site

Deposit $500 and make 5 or more card transactions per month to qualify for your bonus interest.

Product

Home Saver

Real Time Rating™

4.00

/ 5
Maximum rate

2.05%*

% p.a

Base rate

0.10

% p.a

Company
Maximum monthly interest

$26

Total interest earned

$197

Real Time Rating™

4.00

/ 5
Go to site

Each month, deposit $2,000 or more into your Everyday Edge Account from a non-Great Southern Bank account and Using a Visa Debit card from your Everyday Edge Account, make at least five eligble transactions each month.

Product

Online Saver

Real Time Rating™

3.96

/ 5
Maximum rate

2.20%*

% p.a

Base rate

0.10

% p.a

Company
Maximum monthly interest

$28

Total interest earned

$211

Real Time Rating™

3.96

/ 5
Go to site

The bonus interest rate is applicable to the full account balance when a balance between $5,000 and $500,000 is maintained and no withdrawals are made during the month

Product

Zoo Account

Real Time Rating™

3.86

/ 5
Maximum rate

1.80%*

% p.a

Base rate

0.10

% p.a

Company
Maximum monthly interest

$23

Total interest earned

$173

Real Time Rating™

3.86

/ 5
Go to site

Deposit at least $10 a month and make no withdrawals

Product

PremiumSaver

Real Time Rating™

4.26

/ 5
Maximum rate

2.65%*

% p.a

Base rate

0.40

% p.a

Company
Maximum monthly interest

$34

Total interest earned

$255

Real Time Rating™

4.26

/ 5
Go to site

Balance must be increased by $200 a month

Embed

What is a high interest savings account?

Most banks and deposit-taking institutions (DPIs) in Australia offer either a transaction account or a savings account, or a combination of the two. With a transaction account, you earn less interest on your deposit, but you can withdraw or spend the money in the account more easily. On the other hand, a savings account is designed to earn you higher interest while limiting withdrawals. Some people may prefer opening a high-interest savings account which can help them build up their savings faster while imposing more conditions on the use of the money.

The higher interest offered on these accounts is meant to incentivise saving, but you need to make regular deposits to boost your nest egg. Equally, by making fewer withdrawals, the money in the account will accumulate faster. 

Check the account provider’s terms and conditions to see if you need to maintain a minimum balance or deposit a fixed amount every month. Some providers may limit the number of withdrawals you can make and impose penalties, such as reducing the interest rate, if you withdraw more often. In addition, banks may require you to link your high-interest savings account to a transaction account, which can be used for withdrawals and ensure you access the savings account less often

How does a savings account earn interest?

High-interest savings accounts accelerate the growth of your savings by compounding the interest and adding that to the amounts you deposit. Compound interest is calculated as a percentage of the savings account balance and paid by the account provider, usually monthly or annually. 

As a result, interest earned on your savings in the past is also accounted for, not just the amounts deposited, in effect adding interest on interest. Regularly depositing even small sums of money into the account can translate into a significant increase in your savings. 

Suppose you opened a high-interest savings account in an Australian bank offering two per cent interest, compounded monthly, with an initial deposit of $100. The account provider would include the interest earned on this sum in the first month when calculating the interest earned for the second month. Accordingly, even if you didn’t deposit any amount in the second month, you’d earn more interest than you did in the first month. 

On the deposit of $100, you’d earn $2 in interest in one year, $4 by the end of the second year, etc. After five years, your account balance would total $111. However, if you deposited $10 every month in addition to the initial deposit, your account would have $741 in it at the end of five years. See the table below to understand in detail how compound interest works in these two cases.

Year

     Amount deposited ($)

Interest earned ($)

Amount deposited 
($10 per month, $)

Interest earned ($)

 Final Balance 110.40 - 741-
 1 100 2 100+120 = 220
 2 0 2.04 1209
 3 0 2.08 12017 
 4 02.12 120 28
 5 0 2.16 120 41

What are the types of savings accounts with higher interest rates?

High-interest savings accounts are usually either introductory savings accounts or conditional savings accounts, as described below.

  • Introductory savings accounts: These typically offer a higher rate, sometimes called a promotional rate, for the first few months after you open the account, after which you earn interest at the base rate. Consider checking the difference between the promotional rate and the base rate prior to opening an account.

  • Conditional savings accounts: As the name suggests, these accounts require you to meet specified conditions such as maintaining a minimum balance, making regular deposits, making few or no withdrawals in a calendar month, and so on. 

When comparing high-interest savings accounts, you may also come across online savings accounts which can be operated through the provider’s Internet banking site or mobile app. Some purely digital providers may also offer high-interest online savings accounts with no fees, although the lack of a physical location limits customers’ options for getting any complaints resolved. In most cases, you’ll need to link the online savings account to a transaction account, either with another bank or with the same provider. Remember to check if operating these transaction accounts involves paying admin or transaction fees.

Note that you need to declare the interest you earn from your high-interest savings accounts on your tax return. You can check your annual interest income through the bank’s website or app, but you may receive a statement from the bank as well. If you've linked your Tax File Number (TFN) to your MyGov account, the tax you owe on the interest earned will probably be calculated automatically.

RateCity tip for savers

Remember that any interest you earn from your high interest savings account will need to be declared on your tax return. At the end of the financial year, you should get a statement or be able to access the amount through your internet banking. In Australia, if you've linked your Tax File Number (TFN) to your MyGov account, the calculation of tax needing to be paid on your interest earned should happen automatically. 

Why should I get a high-interest savings account?

Opening a high-interest savings account has several benefits, as elaborated below. 

  • Low risk, low cost: You can compare and choose a high-interest savings account that doesn’t charge high account fees and thereby preserve more of your savings. At the same time, most banks and other regulated financial institutions that hold an Australian Credit Licence are backed by the Australian government guarantee, which protects deposit account balances of up to $250,000 in the event the financial institution collapses. For this reason, savings accounts represent a lower risk as compared to other investment options like stocks.

  • Fast-tracking your goals: If you’ve set yourself a financial goal, a high-interest savings account can offer the ideal path to realise it. Depending on the account type you choose and the kind of restrictions you’re comfortable with, you could even qualify for a bonus interest rate and speed up your journey.

  • Ease of opening and closing accounts: A term deposit may get you better rates than a high-interest savings account, but you won’t have any access to your money for the duration of the deposit. The lack of a lock-in period allows you to move your money out of your high-interest savings accounts into a more lucrative investment whenever you prefer.

  • Linked accounts: While you can opt for a high-interest savings account with fewer access conditions, you can earn more interest by minimising withdrawals. Instead, you could link the account to a transaction account and transfer funds between the two accounts when necessary. You can also set up direct debits to deposit a portion of your income into your savings monthly. Also, some account providers offer the benefit of rounding up debit card purchases to the nearest dollar and sending the spare change into your savings account instead. You can also choose other dollar amounts to round up to instead of the nearest dollar.

What is a good high-interest savings account?

Like any other financial product, a good high-interest savings account should suit your financial circumstances and provide an ideal investment option. Comparing savings accounts offered by different providers is a recommended way of deciding whether the account’s benefits extend beyond the interest rate. Here are some of the factors you should consider.

  • Interest rates: If you’re looking to earn more interest over the short term, an account offering a promotional rate might work for you. However, if you want to grow your savings consistently over the long run, look for a conditional savings account with a suitable set of restrictions.

  • Fees: These days, many savings accounts don't charge any fees, especially online savings accounts. Make sure you check the account terms to see which fees are permanently waived and which may apply to some transactions.

  • Cash rate: High-interest savings accounts often come with variable interest rates, which can change based on the market. Any change in the Reserve Bank of Australia's cash rate can influence the interest rate offered to you. If you prefer greater certainty regarding the growth of your savings, consider opening a high-interest term deposit.

  • Features and facilities: The amount of convenience you expect can be another factor. For instance, online savings accounts can get you a higher interest rate and can be operated more conveniently, but you may not have direct access to bank officials at a branch if you need to resolve any account-related issues.

  • Withdrawing funds: You may lose out on earning interest at a higher rate if you make too many withdrawals from a conditional savings account. You could probably divide your deposit between a transaction account and savings account if you anticipate withdrawing money often.

Are high-interest savings accounts worth it?

Making any investment work for you can require taking a well-informed, smart approach and looking at the long-term use of the savings accounts offering high interest. You have to stick to the account terms diligently for the entire time you operate the account, but you also have to decide when to move your money into a more beneficial investment option. For instance, you could save up a certain amount and use it to pay the deposit when buying a house. Alternatively, you could set aside a part of your savings for trading in the stock market. 

Saving up money need not always be an investment - you may need the cash for emergency expenses such as hospitalisation or house repairs. You could also accumulate a vacation fund or a nest egg for your retirement. 

Irrespective of your reason for saving, you’ll need some amount of financial discipline to ensure you keep depositing funds regularly and earn the maximum interest possible. Also, remember that even the best high-interest savings account may not always be the most suitable for your needs, and you should compare different accounts periodically to see if you can save more by opening a different account. 

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