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What you could get with the difference in interest from a high interest savings account

Eden Radford avatar
Eden Radford
- 3 min read
What you could get with the difference in interest from a high interest savings account

The interest rate on your savings account can sometimes make the difference between you having a savings goal, and you achieving it.

With so many accounts to compare from, it can be tricky to really understand just how much of an impact an interest rate can make on your finances - and for some people, the ‘hassle’ of switching can seem hard to justify.

However with the cash rate likely at its peak, it’s important that anyone hoping to make the most of their savings is in the right account with the best interest rate for them - even if it means making a switch.

So, how much of a difference does a high interest savings account make?

While there are many factors that go into choosing the right savings account for you - and you should always find an account that suits your lifestyle and financial circumstances - the interest rate ultimately determines how hard your money will work when it’s in your account.

RateCity research compared a low interest rate account, at 1.10%, with a high interest rate account, at 5.50%, and applied the same saving patterns: a monthly deposit of $1,000, no withdrawals.

After one year, the interest saved on the low rate account was $342. The interest saved on the high rate account was $1,740.

That’s $1,399 more saved on the high interest account, despite everything else being the same. Not bad.

Difference in interest earned high interest savings account vs low interest savings account

Balance of $25,000

RateBalance of $25K
ING Savings Maximiser5.50%$1,740
Westpac eSaver1.10%$342
Difference4.40%$1,399

Source: RateCity.com.au Note: assumes existing customer for low rate account, and monthly terms and conditions are met for max available interest on highest savings account. Assumes monthly deposit of $1000. Does not factor in rate changes.

To help put that into perspective, we’ve compiled a list of all the things you could get for $1,399.

  • 310 lattes (at $4.50 each)
  • An iPad Pro
  • 3 x return flights from Sydney to Melbourne, flying Qantas (traveling economy, in April)
  • 100 large Big Mac combos (at $13.95 each)
  • 215 bubble teas (at $6.50 each)
  • 51 tickets to an AFL game (at $27 for an adult)

Remember that every person has different financial goals and savings habits, so it’s important to find a savings account that you’re comfortable with and confident you’ll meet the terms and conditions for.

Use tools like RateCity’s savings account comparison tool to see what options are out there, and how they could work for you.

Compare savings accounts

Product database updated 19 Apr, 2024

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

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