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1.10%

Intro 4 months then 0.35%

0.35%

Citi

$4.6

$104.9

2.89

/ 5
More details

Gold Award Winner 2020

1.30%

Intro 4 months then 0.65%

0.65%

Heritage Bank

$5.4

$124.1

3.17

/ 5
More details

Learn more about savings accounts

When choosing a savings account, making an interest rate comparison should be one of the first steps you take towards making your final decision.

Comparing interest rates:

When comparing the interest rates of different savings accounts, it’s important to consider both the base rate and the maximum rate.

As the name implies, the base rate is the lowest rate of interest you’ll earn per month on savings in the account. No matter how you use the savings account, you should still earn interest on the account at this minimum rate, and grow your wealth a small amount each month.

The maximum rate is the highest possible rate of interest you can earn on your savings per month. When comparing the maximum rates of different savings accounts, remember that  you may only be able to enjoy this higher interest rate for a limited time.

Some accounts offer a higher introductory rate to help quickly grow your savings after opening the savings account, before reverting to the base interest rate after this introductory period expires.

Other savings accounts offer a higher bonus interest rate, which you can keep enjoying for as long as you fulfil the account’s conditions, such as making regular deposits of a certain value, and/or minimising your withdrawals.

One simple way to make an interest rate comparison when selecting a savings account is to look at the dollar value of the maximum interest earned per month. The more you can potentially earn, and the longer you keep your money in the savings account, the more your wealth can grow. Keep in mind that depending on your savings account’s conditions, you may only be able to earn maximum interest for a limited length of time.

It’s also worth considering whether your savings account charges a fee, and whether the interest you’ll earn on your savings will likely make this fee worthwhile.

Comparing features and benefits:

Other savings account features you may want to compare, other than the interest rate, include:

  • Branch access may be important if you prefer a face-to-face touch when managing your finances
  • ATM and EFTPOS facilities may be important if you want to enjoy convenient access to your savings.
  • Internet and BPAY facilities may be important if you want to be able to manage your wealth and pay your bills at the touch of a button.

Starting your interest rate comparison

When selecting a savings account, simply picking the account with the highest interest rate may not be the most suitable option for your household budget.

It’s always important to consider a variety of different savings accounts, and to weigh up the features and benefits of each one, before making your final decision based on whether these savings accounts will help you to reach you financial goals.

Frequently asked questions

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 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.

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 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.

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.

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.

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.

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.

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.

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.

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 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.

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 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.

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)