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Savings accounts with high interest ratesThese accounts offer a higher interest rate when you meet a couple of account conditions, such as making regular deposits. Compare some of the best high interest savings accounts in the market below. What is a high interest savings account?It's a savings account that pays a higher interest rate than a standard account. Because these accounts offer a higher interest rate, there are usually a few conditions to meet to earn it. For example, you might be required to deposit a minimum amount each month or limit your withdrawals from the account. A regular savings account, in comparison, will offer a lower interest rate on your balance each month, but there usually won't be account conditions to meet. Is now a good time to open a high interest savings account?Yes, now is a good time for people trying to save. Over the last few years savings rates have been at all-time lows, driven by a historically-low cash rate. However the cash rate has been lifted 8 times already this year, with the latest lift in December bringing the cash rate up to 3.10%. Because of this, we've seen many savings accounts increase their rates as a result and they're still going up now. This time last year there weren't many accounts offering much higher than 1.5% p.a., but now there are several accounts paying 3.5% p.a. or even 4%. Standard variable rate vs maximum bonus rateYou'll notice a few different rates when you compare accounts, here's what they mean: Benefits of a high interest savings account
Compared to an everyday transaction account, which usually pays no interest, and a standard savings account, which won't pay much interest, a high interest account can help you grow your savings faster.
Your savings are protected by the Australian government under the government guarantee scheme. Most banks and financial institutions are included in the scheme, which means eligible deposits are insured up to $250,000 per person, per institution.
The money in your account is your money, and it's readily and easily available whenever you need it. Unlike a term deposit, which locks your funds away, you can move the money from your high interest account into your everyday bank account to spend it within seconds of needing it.
Because you often need to deposit money regularly in order to earn the high interest rate, these accounts are a great incentive to save money. They can also be a good motivation to keep your money in the account earning interest rather than spending it on day-to-day items and impulse purchases.
Savings accounts don't charge any account-keeping fees, and there are no fees to add money into or move money out of the account.
Cash rate has increased 8 times this year. The recent increase in December for the cash rate, means the new cash rate is 3.10%. The good news for savers is savings rate will increase because cash rate has increased. Because savings accounts have variable rate, when the interest rate on your savings account goes up, it'll automatically be applied to your account and you stand to earn more interest. How to compare high interest savings accountsThere's more to consider than just the high interest rate. Think about the following when you compare accounts:
🔥 Quick tip when picking a savings accountAlison Banney, Finder's banking editor "A high rate is important, but it's not the only thing to consider. The savings rate on my own account isn't the highest in market (although it's certainly one of the best!), but it has monthly deposit conditions I can easily meet and is linked to an everyday bank account with the same bank, which I find really helpful. If you can't meet the account conditions each month there's little point opening the account, because you won't earn the high rate anyway." Which bank offers the highest savings rate?Currently the highest rate you can get is 4.75% with a Bank of Queensland Future Saver account. This is a great rate, however there are a few conditions to meet. Read our full Bank of Queensland Future Saver review. If this account doesn't suit you or you're not eligible, here are another 5 top savings rates for December 2022. Top 5 high interest savings accounts
How do high interest savings accounts work?Here's how you access your money, how interest is applied and the conditions you might need to meet. How is interest earned?Savings accounts with a higher interest rate will offer a bonus interest rate on top of the base interest rate each month that you meet the account conditions. This gives you the chance to earn extra interest each month. A standard savings account, in comparison, will usually only offer the standard base interest rate with no option to earn extra interest. Compound interestThe money in your account benefits from compound interest that is calculated daily and paid monthly. Compound interest allows you to earn interest on your interest, helping your money grow quicker. For example, let's say your balance was $10,000 and you earned $100 in interest during the month. The following month, interest would be calculated on your full balance of $10,100 (that's your original balance plus the interest earned last month), so you'd earn even more interest the second month. So technically, you don't even need to deposit money regularly for your savings balance to grow. Accessing your savingsYou generally link a savings account to your everyday bank account, usually with the same bank. This allows you to easily move money back and forth from your savings account to your everyday bank account when needed. This is handy, as savings accounts don't come with a debit card to access your money (but bank accounts do). Although you can't spend the money in your savings account using a debit card, you can still access it almost instantly by transferring it to your bank account and spending the money from there. Conditions to meetAs we said earlier, in exchange for a high interest rate on your savings there are usually a few account conditions you need to meet. This varies from bank to bank, but most accounts require you to regularly deposit money and keep growing your balance (which is a good thing if you're trying to save!). High interest accounts usually require you to meet one or several of these conditions:
Some accounts will ask you to met just one condition, while others will ask you to meet a few. Variable interest ratesSavings accounts all offer variable interest rates. Similar to a variable rate home loan, a variable savings rate means it can change at any time, if the bank decides to do so. The opposite of a variable rate is a fixed rate, which is offered on term deposits. A fixed rate doesn't change and is locked in for a set period of time. The increase or decrease of the cash rate influences the variable interest rate. During 2020 and 2021 most banks dropped their savings rates, as the official cash rate was so low. The RBA has lifted the official cash rate again for the 8th time in December, this means variable rates have increased for savings accounts. Fees and chargesThese accounts typically have no account-keeping fees and no regular charges. The account is designed to help you save money, not get eaten away by fees. However, in order to access the money, you'll need to link the account to an everyday spending or transaction account, which might have fees and charges. Is your money safe?A savings account is one of the safest places to keep your cash. This is because the money in account with an Australian bank is protected by the Government's bank guarantee scheme. Under this scheme, your deposit up to $250,000 is guaranteed by the Government, even if something were to happen to the bank. Another reason why these accounts are so safe is because your balance will never go backwards if you don't make withdrawals. Unlike investing in shares which could see you lose money if the share price falls, the money in your savings account can't fall or go down unless you decide to spend it. High interest savings accounts vs standard savings accountsHigh interest savings accounts offer better interest rates, but with more conditions attached. If you're looking for a set-and-forget option without having to meet any ongoing conditions, a standard savings account still offers some level of interest but without any effort on your end. Let's take a look at some high interest savings accounts and regular savings accounts from the same bank, so you can see the difference.
Tips and trapsHere are some tips to help you choose the right account for you and some traps to avoid. Tips
Traps
How do I apply for a high interest savings account?You can open an account online in a matter of minutes. It's free and easy to do and requires little effort or paperwork. Once you’ve clicked through to the bank's secure application page, you will typically need to provide the following:
Once you've finished the application form and the bank has verified your identity, your account will be opened and you'll be able to start transferring money into it and earning interest. We're freeOur comparison tables are completely free to use. We link you directly to the bank's secure application page. On a daily basis we update the rates, fees and conditions of the 200+ accounts on our database. We're expertsWe've researched and rated hundreds of accounts as part of our Finder Awards. We've published 100+ guides and our in-house experts regularly appear on Sunrise, 7News and SBS News. We're independentUnlike other comparison sites, we're not owned by a bank or lender. That means our opinions are our own and you can compare nearly every bank account in Australia on Finder. We're here to helpSince 2015, we’ve helped over 1.3 million Australians find an account by comprehensively comparing rates, fees and account features. We'll never ask for your personal information. We're here to help you make a decision. FAQs on high interest savings accountsAlison Banney is the money editorial manager at Finder. She covers all areas of personal finance, and her areas of expertise are superannuation, banking and saving. She has written about finance for 10 years, having previously worked at Westpac and written for several other major banks and super funds. More guides on Finder
What Bank has highest savings interest rate?Here are the best online savings account interest rates. Popular Direct – APY: 4.01%, min. ... . CIT Bank – APY: 3.85%, min. ... . Citizens Access – APY: 3.75%, min. ... . Synchrony Bank – APY: 3.50%, min. ... . Bread Savings – APY: 3.50%, min. ... . Barclays Bank – APY: 3.40%, min. ... . Citibank – APY: 3.40%, min.. Which bank offers 7% interest on savings account?Do Banks Offer 7% Interest On Savings Accounts? 7% interest isn't something banks offer in the US, but one credit union, Landmark CU, pays 7.50% interest, though there are major requirements and stipulations.
Where can I put my money to earn the most interest?The following ideas can help you make a plan to save and maximize your interest earnings.. High-Yield Savings Account. ... . High-Yield Checking Account. ... . CDs and CD Ladders. ... . Money Market Account. ... . Treasury Bills.. |