If you’re looking to grow your cash without taking big risks, a good savings account is the easiest tool. Australia has a lot of choices, from online high‑interest accounts to offset accounts that can cut your mortgage interest. The trick is to match the account to your goals, whether you want quick access, a steady rate, or tax‑free benefits.
The most obvious factor is the rate you earn. A 4% account will beat a 2% one even if you keep the same balance. But don’t just chase the headline rate. Look at how the bank calculates interest – daily, monthly or annually – and whether they compound it. Daily compounding usually gives you a few extra percent over the year.
Fees are another hidden cost. Some accounts charge monthly fees that can wipe out a portion of your interest. If the fee is $5 a month, you need at least $500 of interest to break even on a 5% account. Check the fine print before you sign up.
High‑Interest Online Savings: These are often the best for pure savings. Banks with no physical branches keep overhead low and pass the savings on to you. Look for accounts that offer a promotional rate for the first three months, then a competitive standard rate. Make sure the promotional period isn’t a trap that drops the rate dramatically.
Offset Accounts: If you have a mortgage, an offset account can be smarter than a regular savings account. The money you keep in the offset reduces the amount of loan interest you pay, effectively giving you a “free” return equal to your mortgage rate. For example, a 5% mortgage offset by $10,000 saves you $500 a year – the same as a 5% savings rate, but you also keep access to the cash.
Term Deposits: These lock your money for a set period, usually six months to five years, and pay a fixed rate. They’re good if you don’t need immediate access and want certainty. Compare the early withdrawal penalty – some banks let you break the deposit with a small fee, while others lock you in completely.Bonus‑Paying Accounts: A few banks offer a cash bonus for opening a new account and meeting a deposit threshold. The bonus can be attractive, but make sure you can meet the requirements without moving money you might need later.
When you compare accounts, use a simple spreadsheet. List the interest rate, compounding frequency, fees, minimum balance, and any bonus conditions. Multiply the rate by your expected balance to see the net return. It only takes a few minutes and can save you hundreds over a year.
Finally, keep an eye on the Australian Prudential Regulation Authority (APRA) insurance limit – currently $250,000 per account holder per institution. If you have more than that, spread the money across different banks to stay fully covered.
Choosing the right savings account isn’t rocket science. Focus on the real earnings after fees, match the account type to your cash flow, and keep your money protected. With the right pick, your savings will grow faster and you’ll have peace of mind knowing your cash is working for you.
Uncover the best banks for savings accounts in Australia with a direct look at interest rates, features, real costs, and expert tips for 2025.