Best Savings Accounts

Find out more about what makes the best Australian savings accounts and how to compare them with Savvy.

Last updated on June 24th, 2022 at 11:39 am by Thomas Perrotta

Best savings accounts comparison

Earning interest on your savings is a highly useful and easy way to increase the money in your account. You can read more about how to compare and choose savings accounts, as well as how to find the best savings interest rates, with Savvy. By familiarising yourself with the factors which make different savings accounts great for you, you’ll be able to make a more confident decision.

Which type of savings account is best for me?

There’s no shortage of savings account types which you can choose from as part of your search for the best one for your needs. It’s important to understand each of these, how they work and the ways in which they can benefit you. The main options for these include:

High interest savings accounts

Often the simplest in terms of structure, high interest savings accounts are designed to give you the strongest return on investment thanks to their higher base rate. It’s important to try to find the best savings interest rates wherever possible, as these can make a big difference when it comes to the amount you earn with them overall.

For instance, if you had a starting balance of $5,000 and deposited $1,000 into your account each month for ten years, you’d earn just under $5,000 in interest with a 0.75% p.a. rate but over $6,500 if you bumped that rate up to 1% p.a.

Introductory rate savings accounts

Otherwise known as honeymoon rates, an introductory offer will set your interest at a high initial rate for a pre-determined period, after which it’ll revert to a standard variable rate. These rates can be highly useful for those looking to boost their short-term savings, but they’re not as suitable if you’re wanting to lock in and increase your savings over a longer period.

You should always check when these rates expire, as some banks and credit unions will set them for as few as three to six months before they revert. Assess your savings goals before opting for this type of account.

Bonus rate savings accounts

These can often be the highest interest savings accounts on the market but will require you to meet certain conditions each month to qualify for that rate. These usually come in the form of minimum monthly deposit requirements (typically between $2,000 and $10,000), bundling your everyday transaction account with that of your savings and reaching a minimum or maximum number of withdrawals.

If you’re looking at one of these accounts, you should make sure the requirements are manageable for you to qualify for the higher bonus rate, as there’s little point in choosing these if you’re unable to do so.

Online savings accounts

With the rise of online banking, online accounts have become the norm for savers all across Australia. There are a variety of key benefits which can be drawn from these accounts, such as lower fees stemming from fewer overheads and highly convenient apps to help you track and control your account on the go.

Because these effectively cut branches out of the equation when it comes to the operation of your account, you may find it less suitable if you prefer to go into your nearest bank location and discuss it with a member of staff.

Age-based savings accounts

Finally, there are savings accounts tailored to different age demographics which are important to bear in mind if you fit into them. These include:

  • Kids’ savings accounts: can access high interest on a bonus rate basis, as well as allow for parental control and teach financial literacy, but their requirements can often be restrictive.
  • Students’ savings accounts: are often less restrictive when it comes to how the funds can be used, such as withdrawals, but interest rates are generally lower than other accounts.
  • Seniors’ savings accounts: rates are based on deeming, which is a percentage applied by the DHS to confirm your assessable income, and are lower than many standard accounts as a result.

How to compare the best Australian savings accounts

Common queries about the best savings accounts

How do I calculate what interest I’ll earn on the best savings accounts?

The formula used for calculating compound interest is:

Principal x (1 + (interest rate ÷ compound frequency)) time period = final balance 

In this case, compound frequency refers to how often your interest compounds. Because this usually occurs monthly, you’ll most likely substitute the number 12 in here. Time period refers to period over which you’re calculating interest. This can be calculated by multiplying the number of years by the compound frequency, so if you were working out interest earned over three years, it would be 3 x 12 = 36. However, to save on the hassle, you can use Savvy’s compound interest calculator.

Is my savings account interest rate locked in?

No – savings account interest rates are variable, meaning they’re subject to change throughout the period you have your account open. Rates can rise or fall in line with market movement, but your institution has the final say over whether your interest rate will fluctuate.

What’s the best savings account for my business?

There are specialised business savings accounts offered by financial institutions which are designed to be used specifically by businesses. These can be linked to your business bank account to help control your business’ cashflow and cover any unexpected expenses down the road. The required minimum balance for these accounts is often considerably higher than personal accounts, though, so it may be more difficult for smaller businesses with more limited turnover to meet their demands.

Can I switch between institutions to ensure I always have access to the best savings accounts?

Yes – it’s always important to compare between institutions and take advantage of the best deals where you can. Unlike loans or term deposits, savings accounts don’t have an established set term over which you’re obligated to remain. Savvy is a great place for comparing savings accounts, as we compare the best savings accounts on the market in the areas that are most relevant to you.

Do I have to give notice before withdrawing from my savings account?

Sometimes – there are some providers who will require that you provide a set amount of notice prior to withdrawing funds from your account. The best savings accounts won’t make you do this, though.

Can I share my savings account with my partner?

Yes – this is called a joint savings account and can be taken out between partners, siblings, relatives or friends. Ensure that the co-owner of the account is a trustworthy one, though, as you shouldn’t risk handing access to your funds to someone you don’t necessarily know well or can trust.