Shop around and check the fine print with savings accounts

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If you’re looking for a savings account with high interest rates, you might be going about it the wrong way.

Many Australians automatically deposit their money with a big four bank. But the problem with that option is that there are many institutions that offer higher interest rates on savings accounts.

You might decide, then, to do an online search so you can find the institution with the highest interest rate in Australia. However, the institution with the highest interest rate might not really have the highest interest rate.


Don’t worry. You’re not alone. So let’s explain.

Big four bank interest rates

Let’s start with the big four banks. ANZ offers the highest ongoing maximum interest rate, at 2.40 per cent (see table below).

Next come Westpac and NAB with 2.30 per cent, followed by Commonwealth Bank with 1.65 per cent.

Lender Product Base rate Max. rate How to earn max. rate
ANZ Progress Saver 0.01% 2.40% Deposit $10/month; make no withdrawals
Westpac Life 1.00% 2.30% Make 1 deposit per month; end month with higher balance than at the start
NAB Reward Saver 0.50% 2.30% Make 1 deposit per month; make no withdrawals
Commonwealth Bank GoalSaver 0.01% 1.65% Deposit $200/month; make no withdrawals

However, there are numerous smaller institutions that offer higher ongoing maximum interest rates than the big four banks.

The key words here are ‘ongoing’ and ‘maximum’.

Base rates, bonus rates and maximum rates

The reason savings accounts can be confusing is that banks can be a little tricky with the way they advertise savings account interest rates.

Many banks offer ‘introductory’ rates. For example, they might pay you 2.50 per cent for the first six months before reverting to a standard rate of, say, 1.00 per cent.

The reason banks do this is because it allows them to advertise a higher interest rate. That’s why an institution that seems to be offering a very high rate might not actually be paying that rate on an ongoing basis.

Many banks also offer ‘bonus’ interest. They guarantee you the ‘base’ rate, but bump you up to the ‘maximum’ rate if you meet certain conditions in a given month. Typical conditions include:

  • Depositing a certain amount of money each month (e.g. $250)
  • Making no withdrawals in that month
  • Keeping your balance below a certain amount in that month (e.g. $250,000)

So a bank might pay you a base rate of 0.50 per cent and a bonus rate of 2.00 per cent for a maximum rate of 2.50 per cent. That allows the bank to advertise the higher rate of 2.50 per cent but – potentially – only pay the lower rate of 0.50 per cent.

Children get the highest interest rates

There’s one final thing to be aware of when comparing savings accounts – banks often offer higher rates to Australians aged under 18 years.

So if a bank says its range of savings accounts pay up to, say, 4 per cent, it might be that only minors can qualify for that rate. The highest adult rate, by contrast, might be, say, 2.50 per cent.

Smaller lenders paying higher rates than the big four

Now that you’ve gotten your head around all those confusing conditions, here are some of the highest savings accounts interest rates in Australia:

Lender Product Base rate Max. rate How to earn max. rate
Bank of Queensland Fast Track 0.50% 3.00% Deposit $1,000/month; keep balance under $250,000
CUA eSaver Extra 0.50% 2.90% Deposit $250/month; make no withdrawals; keep balance under $750,000
UBank USaver with Ultra 1.81% 2.87% Deposit $200/month; keep balance under $200,000
ME Bank Online Savings Account 1.30% 2.85% Make 1 weekly tap-and-go payment with Everyday Transaction Account debit card; keep balance under $250,000
Bank First Bonus Saver Account 0.05% 2.85% Deposit $1/month; make no withdrawals; keep balance under $150,000
Australian Unity Active Saver 1.20% 2.80% Deposit $250/month; make no withdrawals
RAMS Saver 1.15% 2.80% Deposit $200/month; make no withdrawals; keep balance between $200 and $500,000
ING Savings Maximiser 1.00% 2.80% Deposit $1,000/month; make 5 monthly payments with Orange Everyday debit card; keep balance under $100,000
Up Savers 0.75% 2.75% Make 5 monthly purchases from your Everyday Account
RaboDirect 90 Day Notice Saver 2.70% 2.70% Give 90 days notice to withdraw money; keep balance under $250,000

How to open a savings account

Now that you know more about savings accounts and interest rates, you might be ready to switch institutions or open your first account.

The traditional way to open a savings account is to head into a branch. These days, though, many institutions allow you to open savings accounts over the internet.

Here’s what you’ll need:

  • Address
  • Phone number
  • Email address
  • Identification (passport, driver’s licence, birth certificate, Medicare card) for a secure online ID check

You might also wish to provide your tax file number. While it’s not compulsory, the institution might withhold extra tax from your earnings if you don’t.

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