Savings accounts help your money grow faster by offering a higher interest rate than everyday transaction accounts.
Get the highest interest on your savings
Savings accounts usually earn more interest than other accounts. They’re usually online, and don’t have a debit card, so it’s not as easy to dip into your money.
Higher interest rate
The higher the interest rate, the faster your hard-earned savings will grow.
A competitive savings account will offer an interest rate of around 1.5%. A transaction account will usually have an interest rate between 0% and 0.5%.
This means your savings will grow faster in a savings account.
Bonus interest rates
Many savings accounts offer a bonus interest rate if you meet certain conditions. For example, if you make regular deposits of $500 per month, or keep a minimum balance of $5,000.
Honeymoon interest rates
Some banks offer a higher interest rate for a short period of time, called a honeymoon interest rate. Always check what the interest rate will be after the honeymoon period ends.
The best option is a no-fee savings account — you don’t want account fees to eat up your savings.
To open a savings account with some providers, you will also need to open a linked transaction account. This makes it easier to transfer money between the accounts.
Government deposit guarantee
Savings accounts are a low-risk investment. They are protected by the Australian Government’s financial claims scheme. This guarantees to pay you up to $250,000 for savings deposits in the unlikely event your bank, credit union or building society fails. This guarantee applies per person and per institution.
Visit the Financial Claims Scheme to find the institutions and deposits the scheme covers.
Compare savings accounts
Before you open a savings account:
- Compare accounts from different providers so you can find the best one for you.
- Check that the provider is an authorised deposit-taking institution.
Comparison websites can be useful, but they are businesses and may make money through promoted links. They may not cover all your options.
Compare these features:
|Interest rate||what the interest rate ishow often it’s paidif it has a bonus or honeymoon interest rate, and what the conditions are|
|Account fee||monthly account fee|
|Minimum balance||if you need to keep a minimum balance|
|Maximum balance||the maximum you can save in your account|
|Linked account||if you need a linked transaction account with the same provider|
|Withdrawals||how often you can withdraw money|
|Regular deposits||if you need to make regular deposits, and how much|
Review regularly for a better interest rate
Review your savings account regularly. Compare it to others on the market to make sure you’re getting the best interest rate.
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Source: ASIC MoneySmart