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Learn more about savings accounts

Unlike your everyday transaction account, your savings account is the money you set aside for a particular savings goal or an overall savings plan. A savings account could be used for both a short-term savings goal – like buying a gadget or accessory – or a major purchase – like a car or a house.

A savings account would also suit people who are simply setting aside money for emergency purposes, a more long-term savings plan or a major investment.

By keeping the money in a separate account from your everyday transaction account, you will not be as tempted to spend it on day-to-day expenses. It also becomes easier to monitor your progress and how you can save more in a shorter period of time.

Savings accounts are usually accessed by going onto the bank’s app or online banking system and transferring the money into your everyday transaction account. Other savings accounts, however, have minimum deposit requirements or withdrawal restrictions.  

Different types of savings accounts

Know what your savings plan is first and when you ideally want to reach your savings goal.

If it’s a long-term savings plan, it might be good to make a monthly budget plan and consider which savings account would be best for it. Would you want withdrawal restrictions? Would you want a savings account that requires you to make regular contributions? Or would you prioritise a savings account with the highest interest rate?

In order to answer all of that, here are the options you can consider:

Online savings accounts

Getting an online savings account will allow you to access your savings account from anywhere, at any time, as long as you have your mobile phone and the banking app. Online savings accounts usually have higher interest rates, little to no fees, and best of all, it saves you the trouble of personally going to a bank and waiting on the long queues.

Bonus saver accounts

Some savings accounts will even give their customers bonus interest rates if they meet certain conditions specified. It could mean that you would have to meet a minimum monthly deposit or by imposing a withdrawal limit per month. This is ideal for those who want to keep their savings goals on track and for those who want to become better in saving up. Even better, you will be rewarded for your efforts in saving.

Introductory rate savings account

An introductory rate savings account offers an incentive many would be willing to sign up for, which is the introductory bonus rates. These bonus rates usually last for about four to six months upon signing up for the savings account. This appeals to people looking to switch savings accounts – and the introductory bonus rates offered rewards them for the switch.

After the specified time period has expired, the savings account will return to the standard interest rate. This might be a good option for those with only a short-term savings goal or for those who simply want to have an account with a high interest rate (even if it’s only short-term).

High-interest savings account

There are many competitive rates among various high-interest savings accounts in the market. The best part is that most of them don’t have account-servicing fees. That means you’ll get a higher return on the money you deposit into this account and you can meet your savings goals faster.

Minimum-deposit savings account

A minimum-deposit savings account forces you to make a monthly deposit in order to be awarded its high interest rates. The good news is that this gives you an incentive to consistently contribute, which will in turn boost your savings in the long run. Just make sure you do make these regular payments because penalties and fees usually apply if you fail to do so. Minimum deposit savings accounts generally don’t allow you to make withdrawals, either.

Kids savings account

It might be good for you to introduce your children to a savings account, and there are savings accounts specifically for children under 18 years old. A kids savings account is generally like a standard savings account with monthly interest. The interest rates vary per bank but are usually competitive. Bonus interests are generally offered, as well. The best part? Fees and charges are usually waived.

Take note, however, that monthly deposits are usually required and that there are also withdrawal restrictions you need to be made aware of.

Where to find and compare different savings accounts in Australia

Here’s another piece of good news: by using RateCity’s online comparison tool (above), you can quickly and easily research and compare hundreds of different savings accounts throughout Australia.

Having so much choice can seem overwhelming. But by comparing savings accounts online you can narrow your search to include only the options that best suit your needs, which makes selecting a savings account so much simpler.

When you compare savings accounts in Australia using the RateCity comparison tool, all you have to do is enter your deposit amount, savings term and account type.

To narrow your search, you can choose certain criteria to help you find a specific savings account in Australia. For instance, if you insist on having BPAY access, you can filter out all those lenders that don’t offer BPAY access. Or if you’d prefer to view results on savings accounts with ATM access or branch access, it’s possible to drill down your search in this way too.

The difference between a base rate and a maximum rate

Once you’ve done your research, the next step is to decide how to view your search results. You can either group the results based on the base interest rate (either highest to lowest or lowest to highest) or the maximum interest rate (highest to lowest or vice versa).

Some people are surprised to discover that there are two different types of interest rate, and are unsure what the differences are and why these differences exist.

The base interest rate is the minimum interest rate you will be paid; the maximum interest rate is how much you can earn if you meet certain conditions.

These conditions might include:

  • Minimum balance – you have to keep a certain amount of money in your account
  • Minimum deposit – you have to add a certain amount of money to your account each month
  • Maximum withdrawals – you can make only so many withdrawals per month
  • Linked products – you have to use another of the lender’s products, such as a transaction account or credit card

As a general rule, you’ll earn the maximum interest rate in those months where you meet all the conditions – otherwise, you’ll be paid the base rate.

Of course, conditions vary from lender to lender.

Why, though, do lenders have two different types of interest rate? Lenders sometimes argue that it’s to encourage good behaviour, such as saving more and spending less. Cynics sometimes argue that it gives lenders a chance to advertise higher interest rates but to pay lower interest rates.

Whatever the reason, don’t sign up for a savings account unless you understand how much interest you’ll be paid and what conditions apply.

Frequently asked questions

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

What is an ANZ locked savings account?

An ANZ locked savings account locks your money and prevents you from spending. You may use a standard savings account as the account where your salary is deposited. You can then withdraw funds when needed, but aren’t able to make purchases with it. However, this account may not grow much as the continual withdrawing of funds will limit the interest you can earn.

With a locked savings account in ANZ, you know your savings will grow because you can’t access the money. You can also qualify for a bonus when you deposit at least $10 per month and don’t make any withdrawals. To help you with this further you can set up an automatic transfer from your regular ANZ savings or transaction account so you don’t forget to make a monthly deposit.

Your ANZ locked savings account offers you a base interest rate of 0.1 per cent per annum plus an additional bonus interest of 0.49 per cent per year. The interest is calculated daily and credited to your account on the last working day of the month.

Should I open multiple savings accounts with UBank?

UBank offers customers an opportunity to make the most of their savings by opening multiple savings accounts. Having multiple savings accounts with UBank may be ideal for savers tracking different goals in separate accounts. 

It’s important to note that to earn bonus interest, you will still need to meet the conditions of the UBank savings account every month. If you don’t make these deposits, you will receive the standard interest rate, which is typically lower. 

Keep in mind that you won’t earn bonus interest on your UBank savings account in the month an account is opened and if you open multiple savings accounts with UBank, you'll start earning any bonus interest the following month. 

It's also not yet known how long the special interest rate will hang around for, so please check with your bank for more information. 

Should I open a Commonwealth locked savings account?

If you have trouble saving money, a Commbank locked savings account could be a potential solution. A locked savings account won’t let you make withdrawals and as such, it can help you grow your savings balance if you keep topping it up. 

The Commonwealth locked savings account advertises high-interest rates and minimal maintenance fees, along with a host of other incentives that will encourage you not to touch the money. 

The account offers a higher interest rate for each month that you make limited or no withdrawals, as well as regular deposits. 

To qualify for a Commonwealth locked savings account with the advertised features, you will need to fulfil specific criteria such as:

  • Depositing a fixed minimum amount into the account every month.
  • Making a fixed number of deposits each month.
  • Making a minimum or no withdrawals each month.
  • Maintaining a minimum account balance.

Can you have multiple ING savings accounts?

Yes, you can open up to nine accounts with ING at any particular time. If you’re saving money for various goals, such as buying a car or taking a holiday, you can name each of your multiple ING savings accounts differently.

To get a Savings Maximiser account, you’ll need to deposit more than $1000 every month and make at least five additional purchases. If you also want to grow your savings, from 1st March 2021, you can earn up to 1.35 per cent per annum variable interest on one account with a balance of up to $100,000 when you also maintain an Orange Everyday account.

With ING, multiple savings accounts can help keep track of all your savings goals. All the accounts offer flexible withdrawals where you can withdraw as low or as high as you want without impacting your earning interest rate. However, you can only earn the bonus interest on one account. To apply for a Savings Maximiser account, you can visit ingdirect.com.au.

What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria

How much money should I have in my savings account?

A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

Can you set up direct debits from a savings account?

It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

Some transaction accounts allow you to set up direct debits and also earn interest, though you may not enjoy as much flexibility as a dedicated transaction account, or get as high an interest rate as a dedicated savings account.

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

What are the two types of NAB locked savings accounts?

With a locked savings account in NAB, you can earn bonus interest and learn financial discipline. NAB offers two types of locked savings accounts, each with their own terms and conditions.

The NAB Reward Saver account pays a variable base interest rate of 0.05 per cent per annum and a bonus interest of 0.55 per cent. You’re eligible for the bonus if you make a minimum of one deposit on or before the second last banking day and have no withdrawals in the month.

Meanwhile, the NAB iSaver account provides 0.05 per cent as the standard base interest rate and a fixed bonus margin of 0.55 per cent during the first four months from the date of opening the account. You can park your cash in the account and enjoy unlimited monthly transfers between linked daily bank accounts without impacting the interest rate.

Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

What is a Westpac locked savings account?

The Westpac locked savings account (also known as "Westpac Life") can help customers reach savings goals faster through bonus interest. Customers receive 0.2 per cent standard base interest with a variable bonus rate of 0.35 per cent when the closing balance at the end of the month is higher than the opening balance.

There are some conditions to earn the bonus interest on Westpac's locked savings account, though. First, you’ll need to increase the balance each month either through a deposit or not making any withdrawals, and then link it to a Westpac Choice account and make at least five eligible payments using your debit card. Please consult your bank as to what an eligible payment is. 

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.

What are the requirements of an ING Bank locked savings account?

An ING bank locked savings account - also called a term deposit - offers you interest in exchange for holding your money for a period of time.

The terms offered include as little as 90 days or as long as two years. Generally, the longer you lock your money away, the higher the rate of interest. 

The minimum deposit amount for an ING locked savings account is $10,000. 

To be eligible to apply, you must: 

  • Be an Australian resident for tax purposes
  • Be aged 13 years or older
  • Hold the account for personal use (ING offers business term deposits as a separate product). 


Can you set up a savings account online?

Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

Online-only savings accounts are often less expensive than other savings accounts, though they may not offer the same flexibility, features, or face-to-face service as more traditional savings accounts.

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

What is a good interest rate for a savings account?

A good rule of thumb to keep in mind with savings accounts is to look for a rate that is higher than the CPI inflation rate. This number is constantly changing, so check the Reserve Bank of Australia’s page. If you aren’t earning interest above this then the value of your money will go backwards over time.

How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

  • Personal details, including identification (driver’s license, passport etc.)
  • Tax file number
  • Employment details

What are the requirements for opening Commbank multiple savings accounts?

Existing Commbank account holders can open additional accounts online You can open multiple savings accounts with Commbank to meet various goals like a down payment for a home or buying a car. 

To open an account, you’ll need the following:

  • An Australian residential address
  • To be 14 years or older
  • A Tax File Number (TFN) or TFN exemption.
  • Tax residency details

If you’re not a current Commbank account holder, you’ll need an Australian driving licence, birth certificate or passport and Medicare card. You may also have to visit a branch if your identity cannot be confirmed online.