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AMP increases savings rate: which savings account type is the most competitive?

AMP increases savings rate: which savings account type is the most competitive?

Savers across Australia may feel as if earning a decent interest rate on your savings account nest egg feels next to impossible. But a new offer from a leading Australian provider is a timely reminder that it pays to shop around and compare your savings account options.

AMP has today announced changes to its AMP Saver account, with a maximum interest rate of 1.25 per cent now on offer. To be eligible for this maximum rate, savers will need to deposit a minimum of $250 a month.

Previously, the AMP Saver account was offering customers a flat rate of 0.85 per cent. Savers may now enjoy a more competitive interest rate on an ongoing basis, considering they meet all conditions.

This bonus interest amount is now the second most competitive interest rate across all conditional savings accounts, as of April 1.

By increasing its rates, AMP has bucked the trend of savings providers slashing interest rates left, right and centre for the last few months. Since 1 January, 66 savings account providers have slashed interest rates, with the current average rate for adult savers now sitting at 0.34 per cent, according to RateCity research.

And for a provider like AMP, switching the eligibility criteria of earning its bonus rate to having to make a minimum deposit is one way it can encourage savers to grow their nest eggs.

Conditional savings accounts vs. standard savings accounts: which is better?

Due to the current record-low interest rate environment, it’s more important than ever to shop around for accounts with more competitive interest rates.

The latest change to the AMP Saver account comes as a reminder to everyday Aussies to be aware of not only which providers are offering the most competitive rates, but which savings account type may best suit your financial goals.

There are two major types of savings accounts: conditional savers and standard savers.

As the name suggests, conditional savings accounts usually come with a few conditions customers may need to meet to earn a bonus rate, including making minimum deposits or no withdrawals.

Standard savers will offer an ongoing interest rate without needing customers to meet conditions, and it may also come with a high introductory rate for the first few months of the account. After this introductory period, this typically reverts to a lower ongoing rate.

Across the RateCity database, there are more conditional savings accounts with interest rates still above 1 per cent than introductory accounts. For a balance of $50,000, 7 conditional savers offer rates above 1 per cent, compared to 4 introductory accounts.

This means that on average, if you’re looking to nab a higher interest rate, you may be better off considering a conditional savings account.

But, if you’re prone to dipping into your savings or set short-term savings goals and withdraw your nest egg a few times a year, a condition like ‘no withdrawals’ may not suit you. Further, if your income fluctuates it may be harder to meet deposit minimums each month.

Whichever savings account option you choose, it’s crucial that you weigh up the pros and cons of both types. Keep in mind that there’s also more to a savings account than its interest rate, and you may want to review any potential upfront or ongoing fees involved, such as foreign transaction fees.

And in a time when finding a competitive interest rate on a savings account can feel like searching for a needle in a haystack, doing the research and shopping around is more valuable than ever.

Highest conditional saver interest rates

Savings accountMaximum RateConditions
ING Savings Maximiser

1.35%

Deposit at least $1,000 from an external source, make 5+ settled card purchases & grow the balance on the nominated Savings Maximiser account.
AMP Bank Saver

1.25%

Deposit $250+ each month.
86 400 Save Account

1.20%

Deposit $1,000+ each month.
MyState Bank Bonus Saver Account

1.10%

Make eligible deposit of $20 into the Bonus Saver account in the calendar month & make 5 eligible Visa card purchases on the linked Everyday or Glide account in the calendar month.
Ubank USave with USpend

1.10%

Deposit at least $200 a month into USpend transaction account or USave savings account from a non-UBank account to earn bonus rate. This offer is available on balances up to $250,000.

Source: RateCity.com.au. Data accurate as of 01.04.2021.

Highest standard saver interest rates

Savings AccountMaximum rateIntroductory term
Rabobank Australia High Interest Savings Account

1.50%

4 months

Citi Online Saver

1.10%

4 months

Macquarie Bank Savings Account

1.10%

4 months

Summerland Credit Union iSave Online Promotional Offer

1.00%

6 months

Heritage Bank Online Saver

0.95%

4 months

Source: RateCity.com.au. Data accurate as of 01.04.2021.

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This article was reviewed by Personal Finance Editor Georgia Brown before it was published as part of RateCity's Fact Check process.

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