A high interest savings account is a place to tuck your nest egg so it can grow over time. Unlike regular bank accounts, savings accounts earn interest, but just how much you’ll earn depends on each account and what it offers. Compare the best savings accounts below.

Choosing the best savings account

A savings account isn’t for everyday spending. It’s a flexible, online-only account that earns interest on your savings and keeps it separate from your other cash.

You won’t get a debit card with a savings account, so you’ll probably need to have a regular transaction account with a debit card as well. You can choose any transaction account, but linking accounts within one bank can sometimes open up other bonuses.

The goal of a savings account is to save more, so you’ll need to look at a few key factors to decide which one is going to give you the most bang for your buck.

Let’s start with the best features to look for:

• A good interest rate. Interest rates can vary, and generally, you’ll want to go with the best rate in town. Some accounts have a base rate and then a bonus rate for meeting certain criteria.
• Low or no fees. Monthly fees are usually very low – a few dollars a month at most – and some charge no fees at all, which is even better.
• Easy transactions. Is the account easy enough to deposit or withdraw from? You won’t be using it to buy a coffee, but you will need to make regular savings deposits, so make sure it’s a simple process without fees attached. Savings accounts are usually 100% online and accessed via an online banking portal or app.
• Bonuses. Some accounts offer bonus interest rates on top of the base rate for hitting certain targets, like depositing $2,000 per month or not making any withdrawals.

 

And, here are some unhelpful features to watch out for:

• Transaction fees. Fees might be charged for ATM withdrawals or over-the-counter transactions. Typically though, you’d want to avoid using your savings account for everyday spending.
• Conditional interest. Some savings accounts only unlock the interest rate if you deposit a certain amount each month. If you don’t think you’ll meet the conditions, consider an account with a slightly lower interest rate and no minimum deposits.
• Limits on earning interest. It’s common for savings accounts to ‘switch off’ interest earning if you reach a certain amount of savings. The amount can be as low as $25,000 or up to $250,000, so make sure to check the limits suit your savings goals.
• Linked transaction accounts. Some banks will make you open a companion transaction account with your savings account, so be sure to check any fees or conditions attached.

How do I apply for a savings account?

Applying is straightforward – click ‘apply now’ to go to the bank’s website, then fill in the application form. You’ll need proof of ID and residency, such as your license, birth certificate or passport.

There aren’t any credit checks involved, and you’ll probably need to pop just $1 in your new account (there may be a minimum deposit so check the terms first). The whole process takes a few minutes and very little fuss.

A few more tips from us

• Age matters. Some accounts reward you more depending on your age (usually, the younger you are the better your interest rate). Also, you might find savings accounts that allow 12-year-olds to apply, but the most common minimum age is 14 or 18.
• Small banks are worthy. The Big 4 banks have history, but small banks can sometimes offer better deals. Check out a variety of accounts from different banks when comparing.
• Keep comparing. Interest rates fluctuate depending on the Reserve Bank’s cash rate, so check regularly that you’re still getting the best deal from your savings account. There are few penalties or costs for closing and opening these kinds of accounts, making it worthwhile to shop around.
• Maximise your savings. To get the most out of your savings account, make sure you meet minimum deposit criteria to get any bonus interest offers, add funds to your account every month, and try not to dip into your savings. The power of compound interest will grow your nest egg over time!