Shop around and check the fine print with savings accounts

Shop around and check the fine print with savings accounts

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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Learn more about savings accounts

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

What are the two types of NAB locked savings accounts?

With a locked savings account in NAB, you can earn bonus interest and learn financial discipline. NAB offers two types of locked savings accounts, each with their own terms and conditions.

The NAB Reward Saver account pays a variable base interest rate of 0.05 per cent per annum and a bonus interest of 0.55 per cent. You’re eligible for the bonus if you make a minimum of one deposit on or before the second last banking day and have no withdrawals in the month.

Meanwhile, the NAB iSaver account provides 0.05 per cent as the standard base interest rate and a fixed bonus margin of 0.55 per cent during the first four months from the date of opening the account. You can park your cash in the account and enjoy unlimited monthly transfers between linked daily bank accounts without impacting the interest rate.

What is a Westpac locked savings account?

The Westpac locked savings account (also known as "Westpac Life") can help customers reach savings goals faster through bonus interest. Customers receive 0.2 per cent standard base interest with a variable bonus rate of 0.35 per cent when the closing balance at the end of the month is higher than the opening balance.

There are some conditions to earn the bonus interest on Westpac's locked savings account, though. First, you’ll need to increase the balance each month either through a deposit or not making any withdrawals, and then link it to a Westpac Choice account and make at least five eligible payments using your debit card. Please consult your bank as to what an eligible payment is. 

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 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.

What is an ANZ locked savings account?

An ANZ locked savings account locks your money and prevents you from spending. You may use a standard savings account as the account where your salary is deposited. You can then withdraw funds when needed, but aren’t able to make purchases with it. However, this account may not grow much as the continual withdrawing of funds will limit the interest you can earn.

With a locked savings account in ANZ, you know your savings will grow because you can’t access the money. You can also qualify for a bonus when you deposit at least $10 per month and don’t make any withdrawals. To help you with this further you can set up an automatic transfer from your regular ANZ savings or transaction account so you don’t forget to make a monthly deposit.

Your ANZ locked savings account offers you a base interest rate of 0.1 per cent per annum plus an additional bonus interest of 0.49 per cent per year. The interest is calculated daily and credited to your account on the last working day of the month.

Should I open a Commonwealth locked savings account?

If you have trouble saving money, a Commbank locked savings account could be a potential solution. A locked savings account won’t let you make withdrawals and as such, it can help you grow your savings balance if you keep topping it up. 

The Commonwealth locked savings account advertises high-interest rates and minimal maintenance fees, along with a host of other incentives that will encourage you not to touch the money. 

The account offers a higher interest rate for each month that you make limited or no withdrawals, as well as regular deposits. 

To qualify for a Commonwealth locked savings account with the advertised features, you will need to fulfil specific criteria such as:

  • Depositing a fixed minimum amount into the account every month.
  • Making a fixed number of deposits each month.
  • Making a minimum or no withdrawals each month.
  • Maintaining a minimum account balance.

Should I open multiple savings accounts with UBank?

UBank offers customers an opportunity to make the most of their savings by opening multiple savings accounts. Having multiple savings accounts with UBank may be ideal for savers tracking different goals in separate accounts. 

It’s important to note that to earn bonus interest, you will still need to meet the conditions of the UBank savings account every month. If you don’t make these deposits, you will receive the standard interest rate, which is typically lower. 

Keep in mind that you won’t earn bonus interest on your UBank savings account in the month an account is opened and if you open multiple savings accounts with UBank, you'll start earning any bonus interest the following month. 

It's also not yet known how long the special interest rate will hang around for, so please check with your bank for more information. 

Can you have multiple ING savings accounts?

Yes, you can open up to nine accounts with ING at any particular time. If you’re saving money for various goals, such as buying a car or taking a holiday, you can name each of your multiple ING savings accounts differently.

To get a Savings Maximiser account, you’ll need to deposit more than $1000 every month and make at least five additional purchases. If you also want to grow your savings, from 1st March 2021, you can earn up to 1.35 per cent per annum variable interest on one account with a balance of up to $100,000 when you also maintain an Orange Everyday account.

With ING, multiple savings accounts can help keep track of all your savings goals. All the accounts offer flexible withdrawals where you can withdraw as low or as high as you want without impacting your earning interest rate. However, you can only earn the bonus interest on one account. To apply for a Savings Maximiser account, you can visit

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.

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.

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 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.

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.