Your savings account is more than just a place for you to deposit random funds until you need them, or an account which flaunts its balance making you feel guilty about its neglect. Rather, your savings account has the potential to look after you and your family in tough times, help you plan for the future you’ve always wanted and remember what it was like to live within your means – debt free.

Savings Accounts Rates Comparison

Savings Account Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees Min Balance/Min Deposit
UBank USaver
UBank USaver		 6.01% 5.41% 0.60% $0 $0 / $0 Enquire
Citibank Online Saver
Citibank Online Saver		 5.8% 4.75% 1.05% $0 $0 / $0 Enquire
ANZ Online Saver
ANZ Online Saver		 6% 4.25% 1.75% $0 $0 / $0 Enquire
St.George Maxi Saver
St.George Maxi Saver		 5.5% 4.30% 1.20% $$0 $0 / $0 Enquire
Easy Street Bonus Saver Account
Easy Street Bonus Saver Account		 5.61% 0.01% 5.60% $0 $0 / $0 Enquire
NAB iSaver
NAB iSaver		 5.5% 4.15% 1.35% $0 $0 / $0 Enquire

The most effective savings accounts, the ones with the highest interest rates and the lowest fees, are based primarily online so that you have reduced access – and temptation – making it easier to stick to your savings goals. While a high interest savings account which earns you around six or seven per cent interest per annum may not sound like the best way to invest your money, just because it does not offer the highest yield of some other investment options, doesn’t mean it should be discounted.

Instead, consider the benefits of an online, high interest savings account, compared with other popular forms of investments such as property, shares or term deposits. A savings account allows you to maintain at call access to your funds in case you need to access them quickly in an emergency and you won’t pay any fees to spend your savings on your goals. Savings are also a very safe investment because you are depositing your funds in a bank account and there is no danger that you will lose money on a bad investment decision, as long as you choose a reliable provider, and an account with the highest rate for your needs.

Types of Savings Account Interest Rates

When comparing savings account interest rates you need to make sure you are comparing the different accounts and offers on a level playing field, and that means understanding the different types of savings account rates, and the terms which can apply to their use. These savings account rates include:

  • A basic standard variable rate. This is the most common interest rate you will find with high interest savings accounts and you can expect it to be around two per cent higher than the official RBA cash rate. At the same time, this rate on your savings account is variable and if your provider is struggling they may drop their savings account rate so they don’t have to pay as much interest, alternatively if the RBA raises official interest rates this can be good news for savers because most providers will pass on this rise.
  • A Bonus savings rate. bonus rate is one which is used to either attract new customers, or encourage savings account users to save more. Whether a bonus savings interest rate is a reward or a promotion this type of rate is fixed higher than the current standard variable rate available on the account. This means that if you qualify for the bonus, you will earn the higher rate, but if official rates rise and the account’s SVR follows suit, you may find the distance between your bonus and standard rate disappearing.
  • Bonus above the savings interest rate. This can be a more rewarding type of bonus interest because it is a fixed increase over the standard rate, for example 1.5% bonus interest. Therefore, if you open the account and the standard rate is 4% you will be earning 5.5% if you qualify for the bonus, if the standard rate increases to 4.5% then you can be earning 6% interest.
  • Introductory promotional interest rate. Introductory bonus interest rates are used to attract new customers to savings accounts by giving your balance an instant boost with a higher interest rate. These rates are often offered for a certain period of time – one month, six months, 12 months – after which your savings interest rate reverts to the standard rate. In this instance it is important to check that the ongoing standard rate of the account is competitive, because it might be worth forgoing a higher introductory rate for a higher ongoing rate.
  • Bonus interest rewards for deposits. This type of bonus interest often pays a rate above the standard interest rate of the account – for example 1% more – if you make a certain amount or a certain value of rewards in a month.
  • Bonus interest rewards for no withdrawals. In this instance you are rewarded for not using your account and leaving your funds in place to accrue interest so you earn a higher ongoing rate, but for the months you make a withdrawal, your interest rate decreases.

How to Compare Savings Account Interest Rates

Now you know the different types of interest rates you are comparing, and which is best suited for your savings goals, make sure you conduct a comprehensive account comparison, including:

  • Regular interest rate comparisons. Since savings account interest rates are variable and the economy and the RBA’s decisions are anything but static, you will need to make sure that your comparisons are up to date. You will notice than most banks have chalk boards with the day’s savings interest rates on them because of this fluidity so if the account you looked at two weeks ago is the one you want to go with now, make sure you check it still has a competitive interest rate.
  • Call the provider to compare. When comparing savings accounts you want to get a complete picture of the account and the provider so make sure you take a look at their website and make sure it is easy to use and understand as this will often be indicative of the provider’s online banking system. Also make a call to the providers on your savings account short list to see how long you have to wait on hold, and how friendly and informative their staff are.
  • Knowing the importance of compounding interest. Compounding interest is when you earn interest on your interest, and the best scenario you are looking for is a savings account rate which is calculated daily. This means that each day you earn interest on your balance, and on the interest already calculated the previous days, to be paid to your account at the end of the month. It is also important to know that depositing regularly throughout the month to an account which compounds interest daily will earn you more interest – even if you deposit the same amount at the end of the month, in smaller deposits throughout the month you have earned more compounding interest.
  • Compare features and fees. While the savings account rates are important comparison tools, don’t forget to look for the features you want and need to help you manage your account. Also make sure that you can easily operate your account fee free because you don’t want your savings efforts to be eroded by bank charges.