Why you should open a High Interest Savings Account

With recent rate hikes by the Reserve Bank of Australia causing banks to raise their interest rates, borrowers have increasingly felt squeezed. However, if you’re a saver, now might be your time to shine as high interest savings accounts have been bringing in great returns with some savings accounts as high as 5%.

High interest savings accounts are one of the handiest and most reliable tools in your wealth-building belt. Whether you're saving for a dream vacation, a down payment on a house, or building an emergency fund, every dollar counts. 

So, when opting for a high interest savings account, it’s important to make sure that you’re getting the right one for you.

What to look out for with High Interest Savings Account 

While a high interest savings account is beneficial to most savers, there are some things to look out for. The first is that, while interest rates may be incredibly beneficial, savings accounts have variable rates meaning that your interest rate can change as soon as the banks start cutting or raising rates. 

Also, keep in mind that there are some accounts that waive monthly fees. While small fees may seem insignificant, it's important to keep in mind that they can build up over time. After all, $10 a month over the course of a year is $120 and over 10 years that’s potentially $1,200 you’re missing out on.

Another factor to keep in mind is that banks tend to offer higher interest rates savings accounts as a bonus rate. What that means is that you’ll need to fulfil a requirement to actually get the full interest rate.

So, let’s say you have a savings account that offers a base rate of 1%. If you’re a new customer, you’ll get an extra 2.35% on top of that for the first few months. However, afterwards, your account will revert back to 1%. That being said, you can get as much as 5% (+4% to the base rate) if you deposit $1000 a month as part of the bonus rate. 

While this is a fairly straightforward bonus rate that we’ve put forward here, some of them can actually get pretty complicated. Therefore, it’s generally a good idea to check whether the offered bonus rate has a requirement that you know you can realistically meet. 

Opening your high interest savings account

You might be wondering where you can find these high interest savings accounts where you not only get competitive interest rates but can also get low fees. While it's easy to just think of going for one of the big names, there are loads of reputable digital banks that you might not have heard of that offer interesting and competitive rates in comparison to the big players.

Not sure where to find the new high interest savings account for you? At Mozo, we have loads of high interest savings account providers to compare from so that you can get the account that works best for you.