The best savings accounts from banks, building societies and credit unions now pay around 7%.
It’s easy to compare interest rates (check out High-interest savings accounts buying guide) and open a new savings account, while keeping your existing transaction account for everyday transactions.
Worth a look
- The best accounts pay at least 5% on the full balance of the account.
- Internet savings accounts generally don’t offer facilities like ATMs or internet bill payments (although some do).
- You generally link the online account to your everyday account (which can be with a different institution), transferring money in and out whenever you like.
- BankWest's Regular Saver account pays 8% on balances up to $6000.
- To get that rate, each month you must deposit between $50 and $500 and make no withdrawals (if you do, you get no interest that month).
- The account is only available to customers with an eligible BankWest everyday account.
- If you're prepared to invest your money and make no withdrawals for a certain period, term deposits from banks, building societies and credit unions are worth a look.
- When we last checked (January 2008), the highest interest rates for a one-year term deposit were from 7.3% to 7.5%, which is slightly higher than the best online savings accounts.
- To compare the latest rates, go to Buying guide: High-interest savings accounts.
- Make sure the bank, building society or credit union is an Authorised Deposit-taking Institution, regulated by the Australian Prudential Regulatory Authority. There's a list of authorised institutions on the APRA website.
If you have a home loan, consider directing your salary and savings into a linked offset account. Its balance reduces your home loan for interest calculations.
- For example, if your home loan is $300,000 and you’ve $10,000 in the offset account, mortgage interest is calculated on $290,000.
- This effectively 'earns' interest at your mortgage rate (typically 8.5% pa or higher) and you don’t pay income tax on this interest.
- However, watch for offset fees and loan interest rates. Weigh up these costs and benefits.