High interest savings accounts in January 2024

Who has the highest savings rates in January 2024?

Despite savings rates rising last year, many Australians are still getting a poor rate on their savings.

The average rate across all savings accounts in Finder's database is 2.55%. But you can get a rate as high as 5.75% with one of the best accounts.

5 of the highest savings rates right now

• Rabobank High Interest Savings account: 5.75% for the first 4 months only.
• MOVE Bank Growth Saver: 5.7% when you grow your balance by $200+ per month and make no withdrawals.
• ME Bank HomeME savings account: 5.55% ongoing rate when you deposit $2,000 and grow your balance each month.
• ING Savings Maximiser: 5.5% ongoing rate when you link to an ING Orange Everyday account, deposit $1,000, make 5+ card purchases, and grow your balance each month.
• Teachers Mutual Bank Target Saver Account: 5.5% ongoing rate when you deposit $1,000 a month, grow your balance and make no withdrawals.

Market update by Richard Whitten – Finder money editor

What is a high interest savings account?

A high interest savings account is designed for people who want to build up their savings while earning more interest than a standard bank account.

Savings accounts don't usually come with a debit card because they're not designed for everyday spending. That's what a transaction account is for.

Key things to know about high interest savings accounts

• Account conditions. Many banks offer a bonus interest rate if savers meet certain conditions, like depositing $1,000 each month or growing your balance.
• Bonus interest rates. Most high interest savings accounts only really give you a high rate if you meet the conditions. This bonus rate is added to the base or standard rate.
• Ongoing versus introductory interest rates. Most accounts offer an ongoing rate. As long as you meet the criteria, you'll earn that rate each month. Introductory savings rates are often very high, but only last a few months. Then you drop to a lower rate.

Types of savings accounts

• Personal savings accounts. Standard accounts for personal use. These have the highest interest rates.
• Kids savings accounts. Accounts designed to help children build up their savings and learn about money. These accounts have age limits up to 17.
• Student savings accounts. Accounts aimed at teens and young adults.
• Business savings accounts. Savings accounts for business customers to earn interest on business funds.

How to compare high interest savings accounts

Find an account with a high interest rate

For any saver, the higher the rate the better. Right now, many banks offer savings account interest rates above 5%.

But there's a little more to it. Banks break savings rates into 3 parts:

• The standard variable interest rate. This is the base or default rate you get before any bonus rate comes into effect. It's often very low.
• The bonus interest rate. If you meet all the account's conditions you'll qualify for the bonus rate. This is added to the standard rate.
• The maximum savings rate. When you combine the standard and bonus rates, the total is considered the maximum savings rate. Your goal is to earn this rate on your savings each month.

Check the account conditions (and make sure you can meet them)

• Deposit requirements. Many accounts require you to save a set amount each month, typically between $1,000 and $2,000.
• Grow your balance. You may need to end the month with more money in the account than at the start. This means you can withdraw some money, but you must deposit more than you withdraw.
• Withdrawals. Some accounts specify that you make no withdrawals in a month in order to earn the bonus interest.
• Transaction requirements. Some high interest savings accounts require you to make a number of transactions each month. This is usually a requirement to spend money using a linked transaction account.
• Balance limits or tiers. Many banks limit the bonus interest you can earn based on your account balance. You may earn 5.3% on balances up to $250,000, and only earn 2.00% on any money beyond $250,000.

A savings account with a high rate isn't very helpful if you can't meet the account conditions.

If you're only able to save $800 a month, then you don't want an account that requires you to deposit $2,000 each month to get the maximum interest rate.

Understand how savings account rates impact how much interest you earn

Most banks calculate interest on your savings daily and pay it to you monthly. If you have an ongoing rate, that's what you'll earn each month if you meet all the conditions.

If you have an introductory rate, your rate will decrease after the introductory period.

If you have a decent amount of money to deposit, a high introductory rate can sometimes beat a competitive ongoing rate. Here are some examples using some of the highest savings rates in the market (ongoing and introductory) over 12 months.

We've used a deposit size of $40,616, which is the average Australian's savings according to Finder's Consumer Sentiment Tracker. In these examples the slightly higher 4-month introductory rate gives you a higher overall interest payment.

Use a savings interest calculator to get a better understanding of how you can earn interest.

What are the best savings accounts?

Finder has surveyed hundreds of Australian bank customers. We know what most Australians want in the ideal savings account: a high interest rate, minimal account fees and no complicated conditions that make it harder to earn interest. Refer to our best savings accounts page to see all the top accounts and refer to the 2023 Finder Banking Satisfaction Awards page to see the banks that customers have voted for great service.

High interest savings accounts: What features do Australians find most important?

Finder surveyed 1113 Australians in January 2024 and asked them which features matter most when choosing a savings account.

My partner and I have been trying to get the absolute most out of our bank account. Our main bank gave us next to nothing. Then we moved to the absolute best ongoing rate, but quickly found there is more to it than that. When a family member needed a loan, we found that we'd lose our monthly interest once we sent them the money because we wouldn't be able to grow the total balance that month. Ubank is a great option because it doesn't require you to grow the balance each month – only to deposit $200 – and still offers one of the best rates on the market.

— Taylor Blackburn, personal finance specialist and aspiring Aussie homeowner

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Frequently asked questions

• What determines the interest rate for a savings account?

  A bank typically sets savings rates based on these factors:

  • The Reserve Bank's cash rate target. This rate affects banks' short-term borrowing costs and is a benchmark for savings accounts, home loans and more.
  • Competition. Banks are competing with each other and rarely set savings rates much higher or lower than competitors.
  • Strategy. If a bank wants to attract more customer deposits it may increase savings rates and market its accounts more aggressively.

• How do the banks calculate the interest for my savings account?

  Banks typically calculate interest daily and pay it out monthly. At the end of the day, interest is calculated based on the closing balance.

  Interest in your savings account compounds, meaning that the interest you earn in one month is added to your account's funds. Then you earn interest based on the total amount of funds in the account, including the previous month's interest.

  Interest can be compounded daily, monthly or annually.

• Should I declare the interest earned on my tax return?

  Yes. Any interest you earn counts as income and is taxed at the same rate as your salary. You must include it when doing your tax return.

• Are there fees on a savings account?

  No bank account is completely free from fees. But many high interest savings accounts have no monthly account keeping fee or upfront application fee.

• Who are high interest savings accounts best suited for?

  • Do you want to build up your savings while earning interest?
  • Do you have a regular income that you can set aside each month?
  • Do you want to grow your savings rather than spend it, but still need to be able to access the money just in case?

  If this is you, then a high interest savings account is worth considering.

  These accounts are less suitable if you:

  • Need a flexible bank account for everyday spending. You'd be better off using a transaction account.
  • Want to put aside a chunk of money, earn interest and forget all about it. You could look at a term deposit instead.
  • Want to see a strong return on your money and have an appetite for risk. You could consider investing instead.

• Will savings rates continue to rise?

  Interest rates rose throughout 2022 and 2023. It's impossible to know the future, but while inflation remains high there's a chance that the RBA could lift rates even higher in 2024.

• Should I invest my money in a high interest savings account or term deposit?

  With a term deposit you put the money away and don't touch it for months or even years. There are no other conditions.

  With a savings account you have to make regular deposits if you want the maximum interest rate. But if you need the money in a hurry it's easier to access.

  Term deposits and high interest savings accounts have similar rates at the moment. In fact, the best savings accounts actually offer slightly higher interest rates right now.

• Which big banks offer the highest interest savings accounts?

  Here are the high interest savings account rates currently on offer with the Big Four banks:

  Westpac Life Account: 5%

  NAB Reward Saver Account: 5%

  Commonwealth Bank Goal Saver Account: 4.9%

  ANZ Save Account: 4.9%