Need to know
- The highest rates for high-interest savings accounts are currently only 1.5%
- Online banks are ahead of the pack with interest rates, with smaller banks and Westpac, ANZ, CBA and NAB trailing behind
- High-interest savings accounts can come with tricky and very restrictive conditions
There's nothing "high" anymore about the interest rates on high-interest savings accounts. They are down in line with record low cash rates (or the official interest rate set by the RBA – now at 0.25%). So where can you find value for your hard-earned cash?
Online banks – the new kids on the block – currently offer the highest ongoing available of up to 1.5%. Smaller banks offer rates of up to 1.6% but these sometimes come with tricky conditions.
The big banks – CBA, Westpac, ANZ and NAB – offer rates around 0.8% on their bonus saver accounts. Apart from the low rates the catch is:
- you need to make a deposit each month
- ANZ and NAB do not allow any withdrawals in the month
- Westpac and CBA require a higher account balance at the end of the month
- if you don't meet all conditions your rate slips down to an only just above zero interest of 0.1% to 0.05%. Westpac treats their customers slightly better with a rate of 0.4%.
A little extra interest can go a long way in the long run.
How to make your savings count
- High-interest accounts give you a much better return than one of the big banks' transaction or savings accounts.
- Don't fall for teaser accounts, for example from ANZ, CBA, Westpac and NAB – they pay a higher rate at first and revert to a low rate.
- If you have a home loan, a 100% offset account can be a good place for your savings.
- If you have a credit card debt, using a low-interest credit card and paying it off should normally be your first priority.
- Check the bonus rate conditions, sometimes they are quite complex – do they suit you or will you be left with the low standard rate?
High-interest accounts by ongoing rate
(Last updated October 22, 2020)
- Macquarie Savings Account – 1.35% (1.5% first four months). Lower interest rate for $1million and above
- Volt – 1.25%. Balances up to $245,000 (A)
- AMP Bank Saver Account – 1%. Balances above $5million available on discretion
- Move Bank Express Saver – 1%. Balances up to $5million.
High-interest accounts by bonus rate
(Last updated October 22, 2020)
- UP Saver account – 1.6% (0.1% standard rate). Bonus rate condition: Make five or more card purchases per month from Up Everyday account. Balances up to $50,000 (A)
- My State Bank Bonus Saver – 1.5% (0.15% standard rate). Bonus rate condition: At least $20 is deposited each month and five Visa Debit transactions are made each month using linked Everyday or Glide transaction accounts. Balances up to $250,000
- ING Savings Maximiser – 1.5% (0.1% standard rate). Bonus rate condition: Deposit at least $1000 from an external bank account to Orange Everyday account and at least five card purchases with ING debit card each month. Balances up to $100,000 (A)
- Australian Unity Active Saver also offers a 1.5% bonus rate (0.25% standard rate) but requires a monthly $250 deposit and does not allow any withdrawals – so is less flexible than the other accounts. Balances up to $500,000.
Notes: (A) Online bank, sometimes called a neobank. Account can only be accessed through Android or IOS (Apple) app and sometimes internet banking. All of them have recently received a full banking license by APRA (Up products are issued by Bendigo and Adelaide Bank) and the Government $250,000 deposit guarantee applies to them.
Interest rates from ANZ, CBA, NAB and Westpac
- ANZ Online Saver – 0.65% for the first three months, then 0.05% standard rate
- ANZ Progress Saver – 0.85% (0.01% standard rate). Bonus rate condition: deposit of $10 or more and no withdrawals per month.
- CommBank Netbank saver account – 0.9% for the first five months, then 0.05% standard rate
- CommBank Goal Saver account – 0.5% (0.1% standard rate – 0.9% rates for balances above $50,000). Bonus rate condition: One deposit per month and higher account balance at end of month compared to start of month.
- NAB iSaver – 0.85% for the first four months, then 0.05% standard rate
- NAB Reward Saver – 0.8% (0.05% standard rate). Bonus rate conditions: One deposit and no withdrawals each month.
- Westpac esaver – 0.75% for five months, then 0.05% standard rate
- Westpac Life – 0.85% (0.4% standard rate). Bonus rate condition: One deposit and higher account balance at the end of month. 3% for people aged 18 to 29 years old who used their debit card five times a month for eligible purchases.
How much interest can you earn?
What you'd earn if you paid $100 a week for one year into:
- $0.26 – transaction account that pays 0.01% interest
- $13 – account that pays 0.5% interest
- $39 – high interest account paying 1.5% interest
- $116 in the first year – mortgage offset account with a standard variable rate of 4.39% – savings based on a 100% offset account associated with a 25-year $400,000 home loan. NB: Savings will continue to accrue over the life of the loan even if you withdraw the $5200 at the end of the year.
High-interest account traps
Many high-interest accounts offer high interest rates for an introductory period. Often those intro rates revert to very low rates after a short period.
CHOICE tip: Accounts with a bonus rate can work for you if you need a place to park your money for the short-term, as they're more flexible than a term deposit.
Many accounts – often called bonus saver accounts – give you a special rate if you make a minimum deposit such as $200 per month. Check the standard rate the account reverts to when you don't meet the bonus rate conditions.
Minimum deposit conditions are often paired with no withdrawals. Beware of accounts that revert to a low standard rate.
Some accounts only apply a bonus rate to accounts below a limit.
Some accounts work similarly to a term deposit – you need to give a certain number of days' or months' notice before withdrawing your funds.
Some accounts have very complex conditions for their bonus rate.
For example, ING Savings Maximiser pays the bonus rate only for customers who have an Orange Everyday account, deposit at least $1000 from an external bank account to the Orange Everyday account and make at least five settled card purchases using an ING debit card each month.
CHOICE tip: Make sure you only use such an account if you can fulfil its conditions without going out of your way.
Linked transaction accounts
High-interest accounts normally don't charge a monthly fee, but most need to be linked to a transaction account for deposits and withdrawals. Some will only let you link to an account with the same institution, while others let you use any transaction account.