Savings Calculator: How much can you earn?
Compare how much you could earn by placing your money in different account types. Your choice can make a huge difference in your earnings.
Your earnings potential
Amount invested:
Account type:
Annual interest earned:
The difference between the best and worst options:
What this could buy:
If you’ve just received a bonus, sold a property, inherited cash, or saved up a big chunk of money, you’re probably asking: where should I put it so it doesn’t just sit there losing value? Putting a large sum of money into the wrong account can cost you thousands over time. The good news? There are clear, simple options that work better than keeping cash under your mattress-or even in a basic everyday bank account.
Don’t just use your everyday bank account
Most people start by tossing extra cash into their everyday transaction account. It’s easy. It’s familiar. But it’s also one of the worst places for a large sum. Why? Because these accounts typically pay less than 0.1% interest. In Australia, the average transaction account interest rate is 0.01%. That means if you put $100,000 in there, you’d earn just $10 a year. After tax, maybe $7. Meanwhile, inflation is running at 3.2%. Your money is literally shrinking.High-Interest Savings Accounts (HISAs) are the starting point
For most people, a high-interest savings account is the best first move. These accounts are designed to reward you for leaving money untouched. They often pay between 4.5% and 5.5% p.a. right now-some even higher with bonus rates. That’s 50 to 100 times more than your everyday account.Here’s how it works: You open a HISA with a bank or fintech provider (like UBank, ING, or ME Bank). You transfer your lump sum in. Then you leave it there. Most accounts require you to make no withdrawals in a month to get the top rate. If you can do that, you earn 5% on $100,000 = $5,000 a year before tax.
These accounts are also safe. They’re covered by the Australian Government’s Financial Claims Scheme, which protects up to $250,000 per person per authorised deposit-taking institution. So your $100,000 is 100% secure.
Term deposits lock in your rate-and your money
If you don’t need to touch the money for a while, a term deposit is often the best choice. You lock your cash in for a fixed period-3 months, 6 months, 12 months, even 5 years-and the bank pays you a fixed interest rate. Right now, 12-month term deposits are paying 4.7% to 5.3% across major banks like CBA, Westpac, and NAB. Smaller banks and credit unions sometimes offer 5.5% or more.Why choose this over a HISA? Because the rate is guaranteed. No surprises. No risk of the bank cutting your bonus rate next month. If you know you won’t need the money for 12 months, a term deposit gives you more certainty. And if you’re worried about rates rising, you can ladder your term deposits-split your money into three parts and lock them in for 6, 12, and 18 months. That way, you get a higher average rate and access to some cash every few months.
What about offset accounts or mortgage redraws?
Some people think: “I’ve got a home loan. Why not put the money into my offset account?” It’s a smart idea-if you have a mortgage. An offset account reduces the interest you pay on your loan. If your mortgage rate is 6.5%, putting $100,000 into an offset account saves you $6,500 a year in interest. That’s better than earning 5% in a savings account.But here’s the catch: you need to have a mortgage. And you need to be comfortable with the idea that the money isn’t truly separate. If you’re tempted to spend it, an offset account isn’t ideal. Also, if you’re planning to buy another property or need liquidity, a savings account gives you more flexibility.
Emergency fund? Keep it separate
If you’re putting away a large sum because you’re building an emergency fund, don’t mix it with your long-term savings. Keep three to six months’ worth of living expenses in a HISA that lets you withdraw without penalty. The rest can go into a term deposit or other higher-yielding option. This way, you earn more on your long-term cash-and still have quick access to your safety net.What about investments like shares or property?
You might be thinking: “Why not invest this money instead?” That’s a valid question. But investing comes with risk. If you need the money within the next 1-3 years, don’t put it into shares, ETFs, or property. Markets can drop 10%, 20%, even 30% in a year. If you’re forced to sell during a downturn, you could lose thousands.Only consider investing if:
- You don’t need the money for at least 5 years
- You’re comfortable with possible losses
- You’ve already maxed out your savings and term deposit options
For now, focus on safety and guaranteed returns. Once your cash is secure, then think about growing it further.
How to choose: A quick decision guide
Here’s how to pick the right account based on your situation:
| Your Goal | Best Account Type | Why |
|---|---|---|
| Need access within 1-3 months | High-Interest Savings Account | Quick withdrawals, no penalties, high rates |
| Can lock money away for 6-24 months | Term Deposit | Guaranteed rate, no temptation to spend |
| Have a mortgage with offset account | Offset Account | Reduces loan interest-better than earning savings interest |
| Building emergency fund | HISA with no withdrawal penalties | Safe, accessible, earns interest |
| Don’t need money for 5+ years | Investment (ETFs, shares) | Higher long-term growth potential |
What to avoid
- Low-interest transaction accounts - You’re leaving free money on the table.
- Cash management accounts with hidden fees - Some promise high rates but charge $5/month. Check the fine print.
- Putting everything into one account - Diversify your cash. Split between HISA and term deposits.
- Chasing the highest rate without checking safety - Only use ADIs (authorised deposit-taking institutions) covered by the Financial Claims Scheme.
Real-world example: $100,000 in different accounts
Let’s say you have $100,000 to place. Here’s what happens after one year:
- Everyday account (0.01%): $10 earned
- Basic savings account (1.5%): $1,500 earned
- High-interest savings account (5.2%): $5,200 earned
- 12-month term deposit (5.4%): $5,400 earned
- Offset account (mortgage rate 6.5%): $6,500 saved in interest
That’s a $6,490 difference between the worst and best option. That’s not just interest-that’s a vacation, a new car, or a down payment on something bigger.
Final tip: Set it and forget it
Once you’ve chosen your account, automate the transfer. Don’t think about it again for six months. Avoid the temptation to move money around every time rates change. The best strategy isn’t chasing the highest rate-it’s consistency. Pick a solid option, lock it in, and let compound interest do the work.Can I put more than $250,000 in one savings account?
The Australian government guarantees up to $250,000 per person per authorised deposit-taking institution (ADI). If you have more than that, spread it across two or more banks. For example, put $200,000 in one bank and $150,000 in another. That way, every dollar is protected.
Do I pay tax on the interest earned?
Yes. Interest earned on savings accounts is taxable income. It’s added to your total income for the year and taxed at your marginal rate. If you earn more than $18,200 a year, you’ll pay tax on the interest. Banks don’t withhold tax, so set aside a portion for your tax bill.
Are online banks safe for large sums?
Yes. Online banks like UBank, ING, and ME are fully licensed ADIs. They’re covered by the same government guarantee as the big four banks. They often pay higher rates because they have lower overheads. Just make sure the bank is listed on the Australian Prudential Regulation Authority (APRA) website.
Should I use a joint account for a large sum?
It depends. A joint account doubles your government guarantee to $500,000 per institution. But it also means both people can access the money. Only use a joint account if you trust the other person completely and have a clear agreement about how the money will be used.
What happens if interest rates drop after I lock in a term deposit?
Nothing. That’s the point. Your rate is locked in for the term. If rates rise, you miss out-but you also avoid the risk of rates falling. If you’re unsure about future rates, use a laddering strategy: split your money into multiple term deposits with different end dates. That way, you get access to cash regularly and can reinvest at whatever the current rate is.
Next steps
- Compare current HISA and term deposit rates on Canstar or RateCity.
- Check if your bank offers a bonus rate for direct debits or no withdrawals.
- Transfer your lump sum into your chosen account within the next week-don’t delay.
- Set a calendar reminder to review your options in 6-12 months.
Putting a large sum of money to work doesn’t require complicated investing. It just requires choosing the right account-and leaving it alone. The best account isn’t the one with the flashiest marketing. It’s the one that keeps your money safe, earns you the most, and matches your timeline.