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. For example;
- St George (Bank of Melbourne and BankSA) Maxi Saver account pays one of the highest rates (2.85%), but once the three-month honeymoon ends, you end up with one of the lowest rates – just 0.5%.
If you're very organised, you could switch accounts as soon as the introductory period ends, but that won't work for long since the intro rate usually only applies to first-time customers.
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. For example;
- the interest rate for Commonwealth Bank's Goal Saver account reverts to a standard rate of just 0.01% if you make a withdrawal or don't deposit at least $200 in a calendar month.
Minimum deposit conditions are often paired with no withdrawals. Beware of accounts that revert to a low standard rate. For example;
- CUA's eSaver Boost offers a 2.75% bonus rate, which reverts to just 0.25% if you make any withdrawals or don't deposit $250 each month.
Some accounts only apply a bonus rate to accounts below a limit. For example:
- UBank USaver with USaver Ultra transaction account – 2.87%: The bonus interest applies only if the combined balance is less than $200,000.
Some accounts work similar to a term deposit; you need to give a certain number of days or months notice before withdrawing your funds. For example;
- Rabodirect offers notice periods accounts with 31, 60 and 90 day notice periods. You won't get your money before the notice period ends.
Tip: Breaking a term deposit is possible, but not advisable as it usually comes with a fee.
Some accounts have very complex conditions for their bonus rate. For example;
- ING Saving's Maximisers 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 card purchases using an ING debit card each month.
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. For example;
- The Westpac Life Bonus Saver account needs to be linked to a Westpac transaction account. If you don't already have one, Westpac will automatically give you a Westpac Choice account with a $5/monthly fee (waived under certain conditions such as a $2000 monthly deposit).
Tip: Make sure you know what fees and charges apply to your accounts. See our report on the outrageous fees our banks continue to charge.