Are you wanting to save for a house? An overseas holiday? Or maybe you just want to set aside some cash for a rainy day? Opening up a savings account is a super easy, low-risk way which could help you achieve your savings goals and, most importantly, earn a little extra cash. While it can help you work towards saving money, a savings account could also be used to store emergency funds in the case of unexpected life events (e.g. unemployment, medical emergencies, accidents, etc.). So, to help you get started, we’ve put together this list of the best savings accounts in Australia as of 2020!
What exactly is a savings account?
Simply put, a savings account is a bank account where you can store your money and earn interest on it at the same time. Instead of sitting all alone in your everyday transaction account, which tends to have quite low interest rates (usually between 0% to 0.5%), savings accounts could help your money grow with typical interest rates in the range of 1% to 2%. However, some savings accounts with high interest rates come with strings attached whether it’s withdrawal limitations, minimum monthly deposits, or fees. Remember, a savings account is designed for saving, rather than spending!
COVID-19 and interest rates
Interest rates are well known to fluctuate up and down all the time due to a variety of factors including financial crises and inflation. Unfortunately, COVID-19 and its devastating impact on the Australian economy has significantly slashed interest rates. As a result of the economic downturn and rising unemployment rates, The Reserve Bank of Australia has reduced the interest rate down to a historic low of 0.25%.
What bank accounts have the highest interest rates?
There are heaps of different savings accounts on offer in Australia which can make it a daunting task to find the right one for you. Choosing the best savings account for you is an important decision that depends on a number of factors. Not only do you want to get the highest interest rate but you want to make sure you’re not stuck with unnecessary fees or strict conditions. With so many options and factors to consider, it can be an overwhelming task trying to find the best savings account. To help you out, we here at Oiyo have done the research and compiled a table of the best savings accounts in Australia with the highest interest rates.
Please note, the information shown in the following table reflects the current rates offered by financial providers. Products are ranked by their maximum interest rate as of August 2020. Ensure you check upfront with your banking provider to further understand if their product meets your needs.
|Savings Account||Maximum Interest Rate||Conditions|
|Rabobank High Interest Savings Account||2.00% p.a.||
|HSBC Serious Saver Account||1.75% p.a.||
|ING Savings Maximiser||1.65% p.a.||
|MyState Bank Bonus Saver||1.65% p.a.||
|BOQ Fast Track Saver Account||1.65% p.a.||
|U Bank High Interest Savings Account||1.60% p.a.||
|CUA eSaver Reward Account||1.60% p.a.||
|Up Bank Up Savers||1.60% p.a.||
|ME Bank Online Savings Account||1.55% p.a.||
|Citibank Online Saver||1.55% p.a.||
|AMP Saver Account||1.50% p.a.||
|Suncorp Growth Saver Account||1.35% p.a.||
|Bankwest Hero Saver||1.25% p.a.||
*Rates are subject to change over time.
If you want to get an exact idea of how much interest you’ll earn against each savings plan, you can use Moneysmart’s savings goals calculator. This calculator will tell you how much you’ll earn as well as how long it’ll take to reach your financial goals.
How do I find the best savings account for me?
Before you open up a savings account, you’ll need to consider which type of account is the best option for you and will help you achieve your savings goals. There are two main types of savings accounts — introductory rate accounts and bonus saver accounts. Let’s find out what each type means so you can pin down which is the best savings account for you.
Introductory Rate Account
An introductory savings account offers a sign up bonus interest rate, also called a ‘honeymoon’ rate, that only lasts for a limited amount of time, usually for three to six months. After this period ends, your interest rate may go back to a lower rate so it’s super important to check exactly how low before choosing this type of account. This type of account can be more suitable if you have short-term savings goals and don’t mind changing banks regularly to get the highest rates.
Bonus Saver Account
A bonus savings account offers a bonus interest rate when you meet certain requirements. This can range from minimum monthly deposits to how often you can withdraw. This type of account can be a great incentive for saving money in the long-term, especially knowing you’ll lose that high interest rate if you dip into your account.
To understand which type is the best savings account for you will depend on several factors. We’ve listed a few common incentives for both below:
|Introductory Rate||Bonus Saver|
|Suitable for those starting out||Suitable for those who are experienced with saving|
|Intend to make withdrawals||Don’t intend to make withdrawals|
|You can’t meet certain deposit conditions||You can make regular monthly deposits|
|Short term savings goal||Long term savings goal|
|You’re comfortable changing bank accounts once the introductory period is over||You’re happy to link to a transaction account|
What to consider when choosing the best savings account
When hunting for the best savings account, you may want to look at not only who provides the highest interest rates but what rules they come with. Whether it’s monthly fees, minimum deposits or linked accounts, there’s a lot of features to keep an eye out for. Also, don’t forget to always read the terms and conditions before choosing a savings account and make sure your provider is an authorised deposit-taking institution.
You can find out if your provider is authorised by clicking here.
To ensure you’re getting the most of your savings, here are some other important things to look out for when comparing savings accounts:
1. Interest Rates
The key to deciding which is the best savings account for you is a high interest rate and there’s plenty of options to choose from. According to Moneysmart, a competitive interest rate for a savings account is usually around 2%. You’ll notice some savings accounts offer quite high interest rates for only a short period of time. So, just make sure to check whether these accounts still offer a good ongoing interest rate after this period expires. Of course, it’s also important to remember that interest rates are variable and subject to change depending on the market.
When choosing a savings account, you want to make sure it doesn’t come with any sneaky fees that will eat up your savings. The majority of online high interest savings accounts don’t usually come with fees, however some banks may charge a fee for over-the-counter transactions or ATM access so keep an eye out for that.
When deciding on a savings account, it’s important to find out how often you can withdraw money, or if at all. If you anticipate you’ll be making regular withdrawals, it’s recommended you go with a savings account that has a high standard interest rate.
4. Monthly deposit requirements
Most savings accounts require you to deposit a minimum monthly amount to get the highest interest rate. Before choosing a savings account, make sure you have an idea of how much you can save each month and ensure it aligns with the criteria. The amounts can vary from each bank so it’s best to check the minimum amount before signing up. If you don’t meet the minimum deposit either your interest rate will be lower or you won’t get any interest for that month.
As of August 2020, the ING Savings Maximiser account requires a minimum $1,000 deposit each month, while U Bank High Interest Savings Account requires $200 each month.
5. Maximum balance limits
It’s quite common for savings accounts to only apply a bonus rate if the account is below a certain balance limit. Before choosing a savings account, decide the maximum amount you want to store in your savings account.
As of August 2020, Rabobank’s High Interest Savings Account only offers a 2.0% interest rate if the balance is less than $250,000.
6. Linked accounts
It’s important to note that when you open a savings account, some banks require you to open a linked everyday transaction account. This isn’t necessarily a bad thing! It can help make it easier to transfer money between accounts. Just double check there aren’t any extra fees that come with opening a new transaction account or using both accounts from the same bank.
More helpful reads
Here at Oiyo, we’re committed to helping you out with all things finance through helpful information and guides on a range of topics. We hope you enjoyed our article on the best savings accounts in Australia and found what you were looking for. If you’re after more information on banking, make sure to check out other relevant articles.
Oiyo is a consolidated online resource, we are not financial advisors. We work with a range of industry professionals and compliance check our articles to ensure factual accuracy. However, we do not provide professional financial advice. Consider seeking independent legal, financial, taxation or other advice to check how the information and ideas presented in this article relate to your unique circumstances.