What is a high interest savings account?

A high interest savings account is a savings account that offers an extremely competitive interest rate to help your savings grow. All high interest savings accounts have variable interest rates, meaning your rates could go up or down over time, usually in response to changes to the Reserve Bank cash rate.

Which banks offer high interest savings accounts?

Nowadays all of the big banks and dozens of smaller banks, mutuals and online providers in Australia claim to offer high interest savings accounts. But not all high interest savings accounts are created equal, with some offering much more competitive interest rates than others. With so much choice on offer,  it's important to compare the market thoroughly to find the best high interest savings account for your needs.

What are the benefits of a high interest savings account?

High interest savings accounts are flexible and easy to use accounts that can help you to maximise your savings and reach your savings goals faster.

Unlike a term deposit, a high interest savings account offers you the flexibility to deposit money at any time and withdraw all or part of your savings whenever you need it. You can also automate your savings by setting up regular direct debit payments from your everyday bank account to your high interest savings account.

Great savings rates aside, the best high interest savings accounts come with minimal fees and afford you the luxury of managing your money over the internet or via a mobile banking app which makes depositing money or accessing the funds in your account both instant and super easy.

Which banks have the highest savings rates in Australia?

Many of the most competitive savings accounts on the market these days are online offerings. Not only are online accounts easier to access because you can do your banking 24/7, they also generally come with no account service fees and higher interest rates than standard branch access savings accounts.

Below, we've listed the savings accounts with the best interest rates recorded in Mozo's database. These are exclusively accounts with ongoing bonus rates (so no introductory rates which drop after a number of months) that are open to savers of all ages. You may find some kids savings accounts or other age-based accounts with higher rates.

5 top high interest savings accounts in Australia*

*Data sourced from the Mozo database as of  19 October, 2021.

How do high interest savings accounts work? 

Unlike everyday transaction bank accounts, savings accounts are designed to help you save up, so they generally come with higher interest rates and no online transaction or account fees. 

Once you park money inside the savings account, you’ll be able to start earning compound interest. The highest interest rates are usually made up of a base rate and a special rate that you need to meet conditions to get, which combined, give you the maximum savings rate. Conditions could include a deposit minimum or limits on how often you can make withdrawals per month.

Features to look for in a high interest savings account

Not all savings accounts are created equal so, here are the main things you'll want to look at when doing your side-by-side comparison of the high interest accounts on your shortlist:

• Interest rates: Getting a great rate is the key to maximising your savings, and you'll have lots of different options to choose from. Some high interest accounts offer attractive short term introductory savings rates, but if you're looking at signing up for ones of these accounts you'll need to check the ongoing rate to make sure the account will be competitive over the long term once the intro rate has ended.  
• Type of interest rate: All savings accounts rates are variable and this means
  that they can go up and down depending on the market. If you want a set return on your money or a fixed interest rate, you might want to compare term deposits as the interest rates on these are fixed for the term.
• Bonus conditions: To earn the highest rate of interest many savings accounts will require you to meet meet certain conditions, such as depositing a set amount each month or linking your savings account to an everyday transaction account with the same provider. 

• No account fees: While most online high interest savings accounts have no account fees, if you need over the counter branch or ATM access with your savings account you may have to pay a fee for this. Sometimes it will be a per transaction fee or the account might have a monthly fee.

• Accessibility: With most high interest savings accounts your money will be at call, meaning you can withdraw your funds at any time – keep in mind some accounts require you to grow your balance to earn interest, so be careful dipping into funds. There is also a type of term deposit account called a notice account that's a bit different. With these accounts you'll need to give the bank notice that you want to withdraw funds before you can take money out. If you opt for one of these, make sure that you can serve out the required notice period or have other funds available in case of an emergency.

• Automatic transfers: If your high interest savings account requires you to maintain a certain monthly balance in order to get a higher interest rate you will want to make sure you don't miss the deadline. Set up periodic transfers into the account to meet the requirement for monthly deposits through online banking.

• Linked account: Some banks may require you to have a standard transaction account linked to your high interest savings account. Sometimes this account needs to be with the same bank, and sometimes you can link to any bank account. Whatever option you go with, make sure you check the fees and features of the bank account as well.

How do I compare high interest savings accounts?

Mozo makes savings account comparison super easy. In our comparison table above, you'll notice two interest rate columns.

• The Maximum Rate column lists the highest interest rate you can earn with each account in a given month, usually by meeting conditions like depositing a set amount or making a number of transactions. If the account has an introductory rate, this will also be listed in the Maximum Rate column. 
• The Standard Interest Rate column lists the base rate you'll earn in any month that you don't meet the special rate conditions. For accounts that have introductory rates, this column shows the base rate you'll receive once the intro rate has ended. When comparing rates, make sure you read any conditions carefully to ensure that you can meet them.

Do the best savings rates always come with conditions?

To supersize your savings, you can look at earning higher interest with bonus saver offers. These generally require you to fulfil certain criteria such as meeting minimum monthly deposit conditions or making no withdrawals, but if you get an extra 1% interest for doing this it will be worth it.

Before signing up for one of these accounts it's important to be realistic about your savings goals. If you don't think you'll be able to meet conditions on a regular basis you'll likely be better off looking for an account that pays a decent base rate of interest with no strings attached.

Are introductory savings rates worth it?

Some savings accounts offer higher interest rates for an introductory period of around 3 to 6 months, before reverting to a lower ongoing rate. These accounts can often look quite attractive, but as always it pays to compare the detail to make sure you don't get stuck with a dud rate once the intro rate ends. 

Unless you plan on switching savings accounts every few months, there's little point signing up for an account that offers a tasty 2.50% interest for just 3 or 4 months before dropping back to less than 1% once the intro period ends.  If you are comparing introductory savings rates, be sure to check the ongoing rate and make sure that's competitive as well.

Should I bundle accounts to get a higher savings rate?

Many banks now offer their best savings rates to customers who are prepared to open both a savings account and a linked everyday transaction account. They'll encourage customers to use the linked account as their main everyday account for depositing their pay and making regular transactions, which will often be what earns you bonus interest on your savings.

Some of the best savings rates on the market can be obtained using this strategy, but if you're considering doing this be sure to review both accounts and make sure you're getting a competitive deal. If you're going to sign up for a linked everyday account, make sure it has no or minimal account fees and is competitive on things like ATM fees and overseas transaction fees.

How can I get the most out of my high interest savings account?

Choosing the best savings account for you is a great first step, but then what? There are a few steps you can take to help make the most of your shiny new savings account and boost your balance.

• Meet any bonus conditions. The base interest rate on a savings account often isn't the best offer. Check if there’s a special rate available, and try your best to meet any requirements to get it. These often include not making any withdrawals or depositing a minimum amount each month.
• Build up your balance. Because savings account interest is calculated as a percentage of your account balance, the more you have stashed away, the more interest you’ll earn on it. So if you’ve got cash sitting in a bank account that you don’t need right away, transferring it to your savings pile instead can help boost your interest earnings.
• As always, compare savings options. You know the drill here – so make sure you keep an eye on savings rates and switch if necessary.

Should I stash my cash in a high savings savings account or term deposit? 

It depends on what you’re looking for. 

While savings account rates are variable and move up or down with the market, term deposits offer more stability because of their fixed rate, fixed term features. 

Term deposits come with much less flexibility than savings accounts. You could be charged hefty fees if you decide to withdraw early and you can’t make extra deposits. On the flip side, if you can commit to these conditions, there can be slightly higher rates on offer with a term deposit than a regular savings account.

Savings accounts allow you to withdraw or deposit money whenever you like, although some do have limits. The other thing to keep in mind with savings deposits is that in order to score bonus interest, you may need to meet certain requirements like making no withdrawals, depositing a minimum amount per month or making transactions through a linked bank account. 

To find out more about how the two differ and which one is the better fit for you, read our guide on term deposits vs savings accounts.

How secure are my savings? 

The short answer: very secure! 

In Australia, the government guarantees deposits of up to $250,000 with any one Authorised Deposit-taking Institution (ADIs) such as your bank or credit union. This means the government will reimburse that amount should something happen to the ADI.

But if you’ve saved up more than $250,000, you’d need to keep smaller amounts of up to $250,000 inside different banks in order for all your funds to be covered by the guarantee. 

Who can apply for a high interest savings account in Australia?

Everyone! Applying for a savings account is pretty easy, and doesn’t require you to jump through the same hoops as something like a home loan might. A couple of things to keep in mind before applying are:

• Age limits. If you’re under 18, you might like to have a look at kids savings accounts, which are especially designed for those just getting started on their savings stash.
• Minimum deposits. While most accounts can be opened with any minimum balance - even as low as $1 - some savings accounts have a minimum deposit requirement you’ll need to meet. 
• Bank specific criteria. Some credit unions, mutual banks or community owned banks might have other criteria, for example, you might have to live in a certain state or be part of a particular profession. Other member-owned institutions might require you to become a member before opening up a high interest savings account.

What's the best way to open a high interest savings account?

Generally, you can open a savings account online, over the phone or in a bank branch, depending on what you prefer. While you might need some in-person help for big financial commitments like a home loan, a savings account is a little more simple and less risky, so you might opt to open it online.

At Mozo, we think the best way to open your new savings account is right here! Once you’ve used our handy comparison table to find the right option for your needs, you can click the blue ‘Go to site’ button next to it. This will take you through to the bank or credit union’s website, where you can start the process of opening an account.

What information will I need to apply for a high interest savings account?

When you go to open a savings account, whether you do it online, over the phone or in a branch, you’ll need a few details, including your contact details, personal details and some ID. You should have some things ready, like:

• A few different forms of identification, preferably photo ID. These can include a driver’s licence, passport, birth certificate, medicare card or a utility bill.
• Your name, date of birth, address and contact details.
• The details of any other account you want to link, like an everyday transaction account.

How long does it take to open a new savings account?

Because there aren’t any credit checks to worry about, opening a savings account is a pretty quick process. A lot of the time, you can open a new savings account in ten minutes or less, as long as you have all the details you need prepared ahead of time.

The way you choose to open a savings account might also affect how long it takes – opening an account online can be a lot quicker than going into a branch, as you won’t have to wait in line.