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Want the best savings accounts? Be sure to look at more than just the maximum interest. Compare savings account interest rates, fees and more at RateCity to choose an account that suits your financial goals. There is no single best savings account as everyone’s needs are different. Use filters to improve your results.

80+ savings account providers in RateCity’s database

290+ savings account products in RateCity’s database

Mark Bristow

Updated on

21 Nov, 2024

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What is the best type of savings account?

A savings account is a type of bank account where you deposit your money so it can earn interest. Generally, interest is calculated daily and paid monthly.

A savings account is different from a transaction account, which is your traditional, day-to-day bank account for everyday expenses.

There are several different types of savings accounts available, each one of which may be the best choice for a certain type of saver. It’s important to compare the available options to make sure you’re making the best selection for your needs.

The different types of savings accounts include:

Standard savings accounts

Sometimes called flexible accounts, a standard savings account offers one flat rate, with no conditions or minimum deposits required to earn said interest. Keep in mind these base rates are often much lower than the rates offered in introductory periods or bonus interest earned from conditional savers.

Introductory savings accounts

Also known as honeymoon rates, banks can offer extra interest for the first few months of the loan. The interest rate will then revert to a lower standard rate after the introductory period, typically 3-6 months.

Conditional savings accounts

This is a savings account where to earn the highest interest rate, you must meet the bank’s conditions, such as:

Depositing a certain amount of money directly into the savings account, or a linked transaction account, each month;
Making minimal withdrawals (or no withdrawals) from your savings account each month;
Keeping savings account balance above a certain amount, or;
Using your linked transaction account regularly (usually 5 or more purchases a month).

If you don’t meet the conditions, you’ll be reverted to a much lower interest rate for that month.

Online savings accounts

Online savers are, as the name suggests, based entirely online and usually accessed just via an app or online banking. Online savings accounts avoid costly overheads by cutting out branches altogether. This makes for an account with a typically higher rate and less account-keeping fees than a traditional bank’s savings account. But if you’re the kind of person who relies on branches and face-to-face banking, this type of account may not be the best option for you.

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.

Retirement savings accounts

Retirement savings accounts are targeted towards Australians over the age of 55 and pensioners. Before compulsory superannuation, retirement savings accounts were a popular way working Australians could save for their retirement. While they are becoming more rare, there are still several accounts on the market. Retirement savings accounts are also afforded the same regulations and tax benefits as superannuation.

How does compound interest work?

Savings accounts use compound interest to help you reach your savings goals. Compound interest on high interest savings accounts is calculated daily and paid monthly.

Compound interest can help accelerate your savings because you earn interest on the money you initially deposit, as well as the interest you’ve already earned. In essence, you’re earning interest on interest. Also, making additional deposits can seriously transform your savings thanks to compound interest.

Here are some examples of returns you may expect on various balances in a savings account earning 2% interest, without making regular, ongoing deposits.

Balance	Savings after 1 year (5% interest)	Savings after 5 years (5% interest)
$5000	$5256	$6417
$10,000	$10,512	$12,834
$20,000	$21,023	$25,667
$30,000	$31,535	$38,501
$40,000	$42,046	$51,334
$50,000	$52,558	$64,168

Source: Moneysmart compound interest calculator

How to find the best savings account for you

Here are a few things to consider when shopping around for the best savings account for you:

Interest rates

One of the biggest deciding factors for a savings account is interest rate. The higher the rate, the bigger boost your savings will get.

Savings account rates are variable interest rates, so they can fluctuate based on the Reserve Bank of Australia's cash rate, among other factors.

However, rates are important - always make sure to read the fine print. Some accounts may offer bonus interest rates but there may be minimum deposit requirements or other conditions to be met to earn a higher interest rate. Others may offer a high interest rate for an introductory period before it reverts to a lower, standard interest rate.

Fees and costs

A high interest rate doesn’t mean a lot if the savings account charges high fees. These can include monthly account fees, ATM withdrawal fees, EFTPOS (electronic funds transfer at point of sale) fees and transaction fees.

Account type

Online, introductory, conditional, children’s or retirement accounts – which option appeals the most to you? Consider your personal financial situation and how you hope to use the savings account to reach your goals, then choose the appropriate savings account type.

Linked accounts

Often a savings account will need to be linked to a regular bank account or transaction account to ease the transferring of funds or meet certain conditions. Before you apply, ensure the bank account will also suit your financial needs and compare any fees or hidden costs.

Spending habits

If you’re the type of person to dip into your savings, you may want to consider an account that doesn’t reduce your interest rate for doing so. This requires looking over the savings account conditions before applying. The Product Disclosure Statement (PDS) will give you all the information you need about the fees and conditions associated with a savings account.

How are interest rates determined?

Savings account interest rates are often determined by financial institutions and influenced by the Reserve Bank of Australia (RBA) cash rate.

Eight times a year, the RBA Board meets to decide whether the national cash rate should be increased, decreased or held. This can affect millions of Australians and can alter interest rates for deposit accounts as well as home loans.

For example, if the cash rate was cut, savings account providers would typically cut interest rates on savings accounts too. And if the cash rate was raised, then saving account interest rates may rise also - although not always.

When the cash rate is cut, it can mean bad news for those relying on or living off their savings, such as some retirees. However, it could be good news for borrowers as their repayments may be reduced. The RBA takes all of this into consideration when deciding whether to change the cash rate.

What other low risk savings options are there?

One of the best parts of a savings account is the low risk compared to other investment options. You’re not investing anything, and your money can just earn interest over time. It’s also safer than hiding cash under your mattress - or anywhere else in your house - where it could be stolen, damaged, destroyed or lost.

Another relatively low-risk option to park your savings in is a term deposit. These work similarly to savings accounts, however after you’ve deposited your money you cannot reclaim the funds until the end of a fixed term. This also means it’s easier to accurately calculate how much interest you’ll earn on the money in a term deposit in advance.

Term deposits may be a competitive option for those who are prone to dipping into their savings. Term deposits allow you to lock away your money at a fixed rate and charge you high fees for withdrawing it early. If you are someone who finds it hard to control your spending, you may want to lock away your extra money in a term deposit than use a savings account to prevent dipping into your account balance. Compare all of the available options before deciding which may be the best choice for you.

RateCity tips for savers:

Both savings accounts and term deposits are protected under the Financial Claims Scheme. The federal government will guarantee up to $250,000 for each account holder at each licensed bank, building society or credit union incorporated in Australia.

How do you get the best interest rate?

When looking for a competitive savings account interest rate, consider the following:

Keep your rate above inflation

A common rule of thumb is to choose a savings account rate higher than Australia’s current inflation level. This is simply because if your savings don’t grow at or above the rate of inflation, your money will devalue due to its lower purchasing power. It’s also important to keep tax in mind when working out if your money is going backwards.

It’s not always easy to find a savings account with an interest rate above inflation, as the market is prone to fluctuations. Savings accounts have variable interest rates, meaning they are influenced by the Reserve Bank of Australia's cash rate. If the cash rate were to fall far enough, this could mean all savings account rates fall below inflation levels.

That is why it's so crucial you compare your options and review RateCity's top savings accounts to ensure you're getting the greatest possible return on your rainy-day fund.

Use comparison tables

One of the best ways to compare a range of savings accounts is to use comparison tables to compare apples with apples. You can filter and view a range of savings accounts by their maximum interest rates, and also compare how much interest you may earn on your original deposit. This can help you to choose the right savings account for your savings goals.

Keep in mind that there is more to finding the best savings account for your needs than just interest rates. For example, if you won’t be able to meet the terms and conditions to qualify for a savings account’s bonus rates, you may miss out on many of its benefits.

As always, there’s no single best savings account that will work for everyone, but you can find the best savings account for you by comparing the features of different accounts before signing up for one.

What are savings account traps?

Just because savings accounts are considered low risk, doesn’t mean they’ll always be the best choice for you. Watch out for these common mistakes when making a saving account comparison:

Falling for introductory rates

Some people sign up for a savings account and after a few months are surprised to find that they’re earning less interest than was advertised. Savings accounts can offer higher introductory rates for a few months to attract new customers, after which they will revert to a lower standard variable rate. If you’re not careful, this lower rate may be buried in the fine print. Do your research before applying for any savings account.

Not meeting conditions

If you don’t meet the requirements of your conditional savings account as part of your everyday household budgeting, then you may miss out on some serious savings. Some savings accounts have base rates of 0% or just above it. Making this mistake time after time could cost you years towards your savings goals.

Big savings but little risk

While savings accounts can help to keep your money relatively safe, they often deliver lower returns than other investments. If you’re hoping to quickly grow your wealth, it might be worth considering whether you should withdraw some of the money and invest it elsewhere. Just make sure you understand the higher level of risk associated with your new investment.

High fees

Some savings accounts can charge higher than average fees. Use comparison tables and savings calculators before you apply for any savings account to make sure you aren’t taking steps backwards in your savings journey due to costly fees.

Is a joint savings account the best choice?

Many lenders offer joint savings accounts, which give two or more people access to one account. If you’re looking for a convenient way to pool your incomes, a joint savings account could be your best bet in some cases.

You can open a savings account online in just a few minutes, or over the phone or in a branch. You’ll need to provide both parties' identification and contact details, as well as your tax file numbers if you don’t want to be taxed at the maximum rate. Once the account is set up, both parties will be issued a debit card.

Joint accounts are often used by people in romantic relationships, though they can also be used by friends or relatives who want to pool their savings. Whatever your financial situation, it’s important not to open a joint savings account with somebody unless you trust them, as they will be able to withdraw any money you deposit in the account.

Jodie Humphries

Personal Finance Editor

Jodie Humphries is an experienced Personal & Home Finances Editor with expertise in financial topics, including credit, loans, superannuation, mortgage and housing, insurance, telecommunications, and more. For over a decade, Jodie's journalism and editing career has seen work published at both Finder and Sharesight. As one of RateCity's chief contributors, Jodie spent her time working on ways to make personal finances within reach of everyone in Australia.

This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.

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^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, target market determination fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.

What is the best type of savings account?

A savings account is a type of bank account where you deposit your money so it can earn interest. Generally, interest is calculated daily and paid monthly.

A savings account is different from a transaction account, which is your traditional, day-to-day bank account for everyday expenses.

The different types of savings accounts include: