Compare high interest savings accounts: rates up to 5.75%

What's the real value of a high interest rate on your savings account? It all depends on your saving habits and goals. RateCity has crunched the numbers and found that the difference between a high-rate and low-rate savings account could be the equivalent of over 300 coffees over a year, for example.

If you have a specific savings goal in mind, you can use a savings calculator to estimate how long it may take to reach your goal, and how much the interest you earn could help you reach that balance.

Remember that some savings accounts come with specific terms and conditions that must be met monthly to secure the highest rate - so always make sure you know what they are, and that you can achieve them, before locking anything in.

Compare some of the top savings account interest rates in March 2024 on the RateCity database: 

Source: RateCity.com.au. Excludes kids and young adults accounts. 

Updated by Mark Bristow on 5 March 2024. 

A high interest savings account is a type of savings account offered by banks and financial institutions that typically provides a higher interest rate compared to traditional savings accounts. These accounts are designed to help savers grow their savings faster by earning a higher rate of interest on their deposited funds. 

Ideal for a wide array of savings objectives, from vacation funds to significant investments like a house deposit, high-interest savings accounts present a straightforward, low-risk strategy for growing your savings through interest accumulation. 

When seeking the right savings account, it's essential to not only focus on finding the highest interest rates but also to consider the broader picture, including the account's fees and the terms and conditions associated with it. 

A comprehensive savings account comparison can help optimise your savings. While the highest interest rates might initially seem the most attractive, they may not always be the best fit for your specific needs. 

Many savings accounts come with a unique set of rules—such as minimum monthly deposit requirements or limits on withdrawals—that could affect its suitability for your saving habits. Identifying an account that offers competitive interest rates and aligns with your savings habits and goals is key. 

Opening a high-interest savings account may have several benefits, as elaborated below. 

A higher interest rate 

When it comes to your savings, a higher interest rate can help your money grow faster by paying you highly competitive rates compared to transaction accounts that don't pay much (or any) interest. 

An incentive to save 

Some banks require you to deposit money regularly in your account and maintain a minimum balance to earn a higher interest rate. This could act as an incentive for some individuals to save money. But it's also important to check whether you can afford to have the required minimum deposit amount in savings to earn the bonus interest rate. 

Alternatively, you can also find savings accounts with no monthly minimum deposit. While you may not earn a bonus interest rate with such an account, it could encourage you to build a savings habit.

No account keeping fee

Some high-interest savings accounts don't charge any account keeping fees. However, if you need access to ATM withdrawals with your account, you might have to pay a fee. Alternatively, you may consider linking up your savings account with an everyday bank account to access your savings, but there might be account keeping charges applicable on the transaction account. 

Fast-tracking your savings goals 

If you've set yourself a financial goal, a high-interest savings account can offer the ideal path to realise it. Depending on the account type you choose and the kind of restrictions you're comfortable with, you could even qualify for a bonus interest rate and speed up your journey. 

Ease of opening and closing accounts 

A term deposit may get you better rates than a high-interest savings account, but you won't have any access to your money for the duration of the deposit. The lack of a lock-in period on high-interest savings accounts allows you to move your money into a more lucrative investment whenever you prefer. 

Security of funds 

If you're worried about the safety of your funds, you could consider opening an account with a bank covered under the government guarantee scheme. Your savings with such banks are insured by the Australian government for a maximum of $250,000 per person, per institution. 

Different types of savings accounts with higher interest rates include accounts offering bonus interest rates for meeting specific conditions like regular deposits or maintaining a minimum balance. Some provide introductory or honeymoon rates for a limited period, typically offering a higher rate to new customers. 

Online savings accounts, which operate digitally, often offer competitive rates due to lower operational costs. Each type has unique requirements and benefits, tailored to various saving goals and habits. 

1. Introductory savings accounts 

These typically offer a higher rate, sometimes called a promotional rate, for the first few months after you open the account, after which you earn interest at the base rate. Consider checking the difference between the promotional and base rates before opening an account. 

2. Conditional savings accounts 

As the name suggests, these accounts require you to meet specified conditions such as maintaining a minimum balance, making regular deposits, making few or no withdrawals in a calendar month, and so on to earn a bonus or higher interest rate on your savings. 

3. Online savings accounts 

Online savings accounts are typically operated through the provider's Internet banking site or mobile banking app. Some purely digital providers may also offer high-interest online savings accounts with no fees, although the lack of a physical location limits customers' options for contacting their bank. 

4. Children's savings accounts 

Children's savings accounts can help teach your child basic financial literacy in a digital age. Kids can gain an understanding of the banking system and learn how to save money, especially when paired with educational savings apps. Compared to adult accounts, children's savings accounts generally have higher interest rates, but can come with higher fees. 

With numerous accounts offering high interest rates, here are some practical tips to help you make an informed decision when choosing the best account for your savings goals. 

How can you find the best savings account interest rates? 

Comparing savings accounts across a variety of banks can increase your likelihood of identifying one with an attractive interest rate and features that meet your needs. Yet, it's essential to look further than just the rates themselves and take into account any specific conditions tied to securing the higher rate. 

Ensure you understand these terms to decide whether you can meet them consistently. Additionally, be mindful of any fees associated with the savings account to prevent them from diminishing your accrued interest. 

Factors to consider when choosing a good high interest savings account 

When comparing high interest savings accounts, there are several key factors to consider to ensure you choose the best account for your financial needs. 

The main benefits of a savings account are simplicity and low risk. You're not investing anything, so your money can simply sit in the account and earn interest. It's also safer than hiding cash under your mattress, as it can't be easily stolen or damaged.

Another low-risk option is to park your savings in a term deposit. These are similar to savings accounts; however, once you've deposited your money, you can't easily withdraw the funds until the end of a fixed term. The interest rates are fixed in advance, so it's simpler to calculate the interest you'll earn over time. 

Difference between savings accounts and term deposits 

If you're seeking a relatively safe option to grow your money, savings accounts and term deposits are two popular choices. While the former provides flexibility, the latter offers certainty. For example, with a savings account, you can access your funds when needed, which could make it a handy option for short-term savings goals or as an emergency fund. 

The interest rates on savings accounts are variable, meaning they can fluctuate based on market conditions or changes in the Reserve Bank's cash rate. In contrast, term deposits offer a fixed interest rate over a predetermined period, ranging from a few months to up to five years. This fixed rate provides the certainty of knowing exactly how much interest you will earn by the deposit's maturity, making term deposits suitable for long-term financial planning where immediate access to the funds is not required. 

In general, term deposits can be a competitive option for anyone prone to dipping into their savings, as you can lock away your money to earn interest at a fixed rate, making slow and steady progress towards your savings goals. While it is possible to end your term deposit early to access your money if you need it, you'll likely need to provide plenty of advance notice (often at least a month), may miss out on interest income, and may also need to pay an early withdrawal fee. 

Choosing between a savings account and a term deposit depends on your financial goals and whether you need to access your money in the short term. Check our comparison tables for the latest comparisons and detailed analysis of both savings accounts and term deposits, including the most competitive rates and terms available. RateCity provides up-to-date information and tools to help you make an informed decision that best suits your savings strategy. 

Opening a savings account is straightforward and isn't likely to take up much of your time. Once you have found an account suitable for you, all you need to do is contact your lender via phone or visit a branch to begin the process. Some banks also let you open an account online by filling out an online application supported by copies of one or more of your primary documents.

If you're looking to open a new account or planning to move your savings to another bank, it might be worth comparing high-interest savings accounts from different providers to find a competitive interest rate. Here are a few points worth comparing in addition to the interest rates when searching for a suitable account to grow your savings: 

• Some banks may offer high interest rates but require you to meet some tough conditions to earn that interest. For instance, you may be required to deposit a minimum amount each month to earn the high rate, and it's worth checking whether you can afford it or not. 
• If you open an account with a high introductory rate, you'll only earn bonus interest for a short period, after which your interest rate will revert to a lower base rate. 
• There are some banks that require you to have a transaction account with them to open a savings account. While savings accounts don't usually charge a fee, it's worth checking the fees and costs you need to pay for a transaction account so it doesn't eat into your savings. 

Overall, a high-interest savings account could help you grow your savings without much additional effort on your part. But it's worth comparing other savings options, like term deposits, before deciding on a savings method that fits your money attitude and goals. 

Many lenders offer joint savings accounts, where two or more people have access to a common bank account. Joint accounts are often used by people in romantic relationships, although they can also be used by friends or relatives wanting to pool their savings to reach a shared goal. 

It's important to only open a joint savings account with people you trust, as they will be able to withdraw any money you deposit in the account.

You can open a joint savings account online in just a few minutes, or by visiting a bank branch. In either case, you'll need to provide identification and contact details for both parties, as well as your tax file numbers if you don't want to be taxed at the maximum rate. Just fill in the application and submit it to the savings account provider of your choice.