Young Aussies offered highest savings interest rates in 2020

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By Olivia Gee ·

Most Australians aren’t getting much joy from their savings accounts right now. In our snapshot of December’s savings interest rate landscape, we saw the average ongoing savings rate in Mozo’s database plunge to less than half a percent.

But there is some hope and it’s held in the hot little hands of young savers. 

Specialised savings accounts for kids and young adults are well and truly leading the way, with interest rates as high as 3.00%. 

If they’ve been taught well, anyone who sits in the relevant age bracket should get saving while the variable savings rates are good. Make sure you check the fine print of the market-leading accounts below for any conditions you’ll need to meet to earn bonus interest.

Young adults savings accounts

Bank of Queensland Fast Track Starter Account
  • For people aged 14-24
  • 3.00% special rate on balances up to $10,000
  • Mozo Experts Choice Award winner

Bank of Queensland increased interest on this account by 50 basis points (bp) in November. This has been amidst a flood of cuts so it’s a great time to jump on board, especially since the account won the Mozo Experts Choice Award for Student Savings. If you’re on a savings train and your balance tips over the ten grand limit for the 3.00% interest, you can still earn 1.05% bonus interest on every dollar between $10,000 and $250,000.

Bonus interest criteria:
You’ll need to have a linked Day2Day Plus Account  where you deposit $200 or more each month. You also need to make five eligible transactions throughout the month to score the top rate (the base rate is a low 0.05%, so make sure you meet the criteria).

Westpac Life
  • For people aged 18-29
  • 3.00% bonus interest on balances up to $30,000

If you open a Westpac Life account and you sit in the magic 18-29 age bracket, you’ll automatically start incurring 3.00% interest on up to a massive $30,000 in savings (so long as you meet the criteria). Keep in mind, any amount over that can only earn 0.55%, and if you don’t meet any of the savings conditions the base rate is only 0.20%.

Bonus interest criteria:
You’ll need to make five settled transactions via a linked Westpac Choice account during the month and add to your savings balance to earn this top rate. There is a $5 monthly fee for the transaction account, but you can avoid paying this by depositing $2,000 each month (so, perhaps popping your salary in there).

Newcastle Permanent Smart Saver
  • For under 25s
  • 1.55% special rate on all balances

While Newcastle Permanent cut their Smart Saver account by 25bp in November, this is still a competitive rate compared to bonus interest options that are available for all ages.

Bonus interest criteria:
Simply grow your balance by at least $10 each month (excluding your interest earnings, as always) and make no more than two withdrawals and you’ll get the top rate. However, here’s your official warning about the base rate: if you don’t meet these conditions you won’t earn any interest on your savings at all (yup, 0.00%).

Kids savings accounts

Auswide Bank Ziggy Kids Saver
  • For kids under 12
  • 2.01% bonus rate

Real young tykes can start their savings journey (with the permission and assistance of a wise carer) with this fab interest rate. 

Bonus interest criteria:
Proactive savers and their parents will need to make a minimum of one deposit each month and hold off on withdrawals to earn the bonus rate. Otherwise kiddo’s balance will only earn the tiny base rate of 0.01%.

Australian Unity Kids Saver Account
  • For under 14s
  • 2.00% bonus interest on up to $20,000

This is a simple one for kids and parents to manage. You can choose to link the account to a free transaction account, or simply deposit savings from elsewhere.

Bonus interest criteria:
The balance must grow by at least $5 each month and no withdrawals can be made. Kids will still receive a decent 1.00% interest rate if they forget these conditions, though.

Police Bank Dynamo Kids Savings Account
  • For kids up to 12 years old
  • 1.80% on balances from $500-$50,000

This is another savings account that can be taken out solo, so kids and their parents can focus on building up savings rather than spending pocket money.

Bonus interest criteria:
Bonus interest is available if $20 is deposited each month and no withdrawals are made. The 1.80% rate is for balances from $500 up to $50,000, but for kids just starting out with $0-$499, the maximum rate is 1.55%. Base rates also alter depending on the balance amount, with savings over $500 earning 0.50% and those under collecting 0.25% when bonus conditions aren’t met.

What to do when you grow out of your youth savings account

The one catch with all of these savings accounts is the age-based timeline. Unless you discover the elixir of youth, you’re not always going to be eligible to use them. So, what happens when you age out of your savings account?

Many banks will have a policy where your account will be switched from a kids or youth option to their standard savings account, once you’re no longer in the relevant age group. For others with in-built savings interest rates for different ages, you’ll simply start receiving the standard rate instead of the higher age-specific option.

The regular savings rate with your current bank may not be all that hot, even if the youth account was. So, give yourself the gift of a top savings rate when your age limit birthday comes around by comparing your options. 

Head to Mozo’s savings account comparison page to find an account that will serve you well in your next stage of life.

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