Rates for savings accounts have been steadily dropping since last year, and that trend will only accelerate when the Reserve Bank decides to reduce the cash rate in the coming months. When that happens, we’ll likely see larger cuts levelled against savings accounts than home loans, as banks try to maintain a healthy margin between the two.
Currently, the average ongoing savings rate sits at 0.98% p.a., while the average among the big four banks is 0.58% p.a. Among savings accounts tracked by Mozo, only 10 offer rates of at least 2.00% p.a.
As expected, neobanks have emerged as the ones to watch in the savings arena, with 86 400, Up and Xinja currently offering maximum rates as high as 2.25%. Newcomer Volt Bank is also slated to roll out its savings account this month. When it does, it will come with a no strings base savings rate of 2.15% p.a.
Last month saw ANZ shave 0.05% off the base rate for its online saver account, bringing it to a measly 0.05% p.a. A three month introductory bonus sees that rate bumped up to 1.55% p.a., but this is short-lived and savers should be prepared to shop around and make the switch if they spot a better deal.
Peter has been working in the Australian banking and finance industry for over 20 years and oversees Mozo’s extensive product database. He is regularly sought out for his expert commentary and analysis on banking and interest rates trends by print, radio and TV media.
Page last updated February 19, 2020
Latest savings account interest rates on Mozo - rates updated daily Mozo has robust processes to ensure our site is updated to reflect the latest information from providers. There may be the odd occasion where updates are delayed, so please confirm information before purchasing.
Ongoing bonus rate applied if in the previous month $1,000 or more is credited to the linked Day2Day Plus account and 5 eligible transactions are made by the linked account.
0.35% p.a.(for $1 and over)
Earn Bonus Interest variable rate by depositing $1,000 a month + 5 eligible transactions to your linked Bank of Queensland Day2Day Plus Account. Earn Bonus Interest on your savings, with no minimum balance required.
Bonus rate for the first 4 months from account opening on the first $250,000 deposited. For new Saver customers only.
1.40% p.a.(for $0 to $5,000,000)
Competitive interest rates, calculated daily and paid monthly. A bonus interest rate of 0.96% per annum for the first 4 months and the first $250,000 deposited (For new Saver customers only, this offer is not available for existing or prior Saver/eASYSaver customers). Winner of the Mozo Experts Choice Awards 2019 in Kick Start Savings & No Strings Savings.
Bonus interest only applies on funds held in linked USaver account if $200 deposited into either account in the month from an external source.
1.04% p.a.(for $0 to $5,000,000)
The UBank Ultra Transaction Account works hand in hand with the USaver. Receive a generous 2.10% ongoing bonus rate when you deposit at least $200 into either account each month. No international fees. Winner of the Mozo Experts Choice Awards 2019 as Savings Bank of the Year.
Bonus rate for the first 4 months from account opening
1.05% p.a.(for $0 to $250,001)
No fees, no minimum balance, no minimum monthly deposit and no minimum term. Rabobank's account was also awarded an impressive two 2019 Mozo Experts Choice Awards in the No Strings Savings and Kick Start Savings categories.
Bonus rate for the first 4 months from account opening, reverting to standard variable rate. Rate shown is for Personal customers and is subject to change. Different rates apply to Business/SMSF customers.
Bonus rate for the first 4 months from account opening
0.85% p.a.(for $0 and over)
Earn the variable introductory rate, currently 2.30% p.a., for the first 4 months while the account balance remains below $500,000 (interest rate may change throughout the period). At the end of the introductory period (or if your balance is $500,000 or more) you'll receive the 0.85% p.a. standard variable rate on the entire balance.
No withdrawals in the month. Bonus rate for first 4 months, reverting to 0.45% bonus rate after*
0% p.a.(for $0 and over)
$0 Monthly account fee. 2.60% p.a. 4 Month Introductory Variable Rate. 0.70% p.a. ongoing Variable Rate applicable every month you don’t make a withdrawal (both for the Introductory and Ongoing Variable Rates)
Deposit at least $1,000 to either Pay or Save account from an external source each month.
0.40% p.a.(for $0 and over)
Earn up to 2.25% interest when you deposit $1,000 per month into any of your 86 400 accounts. No monthly fees. Free cash withdrawals from over 10,000 Australian Bank ATMs. Deposits up to $250,000 covered by Australian Government financial claims scheme.
A savings account is a low risk account where you can stash the savings that you don’t plan to use for daily expenses. Generally speaking, savings accounts usually require a low minimum balance, and are a good way to keep your money safe but still accessible.
How is my savings account interest calculated?
Most savings accounts calculate and compound interest daily. This means that the amount of interest you earn is constantly growing, and you can boost it by making regular deposits into your savings account.
For example, if you have $1,000 in a savings account with an interest rate of 2.0% p.a., you’ll earn $20 in interest each year. If you were to add monthly deposits of $175, you could double your interest. Check out our savings calculator to work out what your interest rate is earning you.
Types of saving account interest rates
Different types of savings accounts will have different interest rates attached to them. Here are some of the popular types of savings accounts and what interest rate you might expect from them.
Online interest rates
For technology-savvy savers, online savings accounts are a great way to maximise your interest. Online banking cuts out overhead costs for the banks, which usually means higher interest rates and lower (if any) fees for you.
Introductory interest rates
Offered as incentive to open an account, introductory interest rates usually apply for a period of 3-6 months from the time when you open the account. Intro rates are usually very high, but remember to check the standard rate as well before you open an account, because after the initial introductory period your interest will go back to the standard rate. An account with a high introductory rate is perfect if you’re saving for a short term goal, like a new car or a shopping spree.
Bonus interest rates
These rates are offered as long as you meet certain conditions, usually something like a monthly minimum deposit or maximum withdrawal limit. Some only require you to make a certain amount of purchases each month using your linked everyday transaction account.
Bonus interest rates are higher than the account’s standard rate, sometimes by quite a bit, so it's worth checking out what you might have to do to be eligible. Knowing that your high interest rate may be conditional upon not withdrawing from your account is also a great motivator to stick to your budget!
After starting his career working for a range of Australian banks, Peter has spent the last 16 years analysing trends in the financial industry to help enable consumers to better manage their money and achieve financial freedom. A savvy numbers man, Peter lives and breathes data in all forms, and this, combined with his expertise in compliance, make him the oracle when it comes to financial know-how.
FAQs about savings account interest rates
We've covered what savings accounts are and the types of interest they offer, but there might still be one or two things you're in the dark about. Below, we've compiled a few key questions to put you on the right track to finding the perfect savings account.
Like home loans and term deposits, savings account rates move in line with the cash rate. When the Reserve Bank reduces official interest rates, banks are usually quick to cut their savings rates in kind. If, however, the RBA was to raise official interest rates, you can generally expect much more attractive returns on your savings.
There are a few key features to keep in mind when you’re shopping around for a competitive savings account. While securing the highest possible interest rate might seem like the most important thing, it can sometimes be a bit trickier than that. Keep an eye on these things when choosing a savings account:
High ongoing interest rate: When you compare savings accounts on the Mozo website, you’ll see special and standard interest rates. The high special rates are always very tempting, but it’s important to remember that these rates often don’t last more than a few months, or may be reliant on conditions that you can’t meet. That’s why it's important to look at the standard interest rate and make sure it is also competitive.
High introductory rate: A savings account with a high introductory interest rate is a great way to boost your savings. This is great because it isn’t reliant on withdrawal or deposit requirements - all you need to do is open the account.
Compulsory linked accounts: Some savings accounts, especially online ones, will require you to have a linked transactions account so you can transfer money to and from the savings account. Make sure that you’re not paying extra fees or charges with this account, or all your hard earned interest may not mean much.
Extra fees and charges: These days, most online banking is fee free, but make sure you’re not paying annual account fees or transaction fees. When you’re trying to maximise your savings, a high interest rate may not mean much if you’re paying extra fees on the account.
Monthly deposit requirements: Sometimes your interest rate will depend on you maintaining a minimum monthly balance or making a minimum monthly deposit. If you can’t do so, some banks will lower your interest rate for the month, or maybe not pay interest at all. So before you choose a savings account, it's a good idea to look closely at your budget and choose an account with conditions you can meet each month.
Withdrawal conditions: Your savings account is designed as a place to park your money and leave it there. That means there could be conditions or penalties for making withdrawals from it. Some accounts might not pay interest for the month in which you made a withdrawal, although some will allow one withdrawal without penalty. So if you can, leave your savings account alone, and check out a competitive transaction account instead.
If you’re looking to maximise your savings, earning interest is one of the easiest and low-risk ways to do it. Use some of these handy tips to help you make the most of your savings account interest rate.
Get online: Online banking is easy and efficient, and you can do it wherever and whenever you need to. Even better, online accounts usually come with no fees and high interest rates. If you don’t need to have branch access and are happy to manage your savings from the comfort of your own lounge chair, an account with an online provider is competitive and convenient.
Switch accounts regularly: You can take advantage of high introductory interest rates by switching accounts regularly. Most introductory periods last between 3 and 6 months, so when one runs out, you can close the account and open a different one. This can be a time consuming process and can be more of a hassle than it’s worth for some people, but one of the benefits of online banking is that it’s easier than ever to switch bank accounts.
You need to take a lot of things into account when choosing the right savings account for you: bonus and introductory interest rates, ongoing interest rates, fees and conditions. You’ll also need to know what kind of deposits your budget allows for and how you want to use your account. It can all seem a little overwhelming, so here at Mozo, we’ve taken some of the hard work out of it for you with these handy resources:
Savings account comparison page - check out all the latest interest rates available on savings account from a range of providers and choose the one that suits you best.
Savings account guides - we’ve got guides that cover all the important details you’ll need to know about when setting up a savings account that will earn you the most interest.
Reviews of savings accounts - there’s nothing better than first hand experience! Read reviews from customers on their savings accounts experiences.
You can also find out more about interest rates, how they work and what they mean for you by visiting our interest rate guides pages.