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What is a savings account?

Outstanding value savings accountA savings account is – as the name suggests – a bank account into which you deposit money to accrue interest and build your savings.

Savings accounts are popular and useful for just about anyone who’s trying to save towards a goal. Some investors, such as those with a self-managed super fund, use a savings account as part of their investment portfolio to guarantee receiving some kind of return on their money.

Savings are trending downwards in Australia at the time of writing, with Aussies squirreling away just 8.3% of our income in 2015 compared to 11.8% in 2012. However, it’s not all bad news for those trying to save. A new OECD study on inequality shows that we are still the third-richest country in the world, behind the USA and Canada. We are also one of the few countries where the income earned by the bottom 10% of our population has risen since the GFC, showing positive economic growth where it’s most needed.

When we have realistic goals for our savings and we know what to look for when choosing a savings account, we can do quite well for ourselves. You can make a plan today for building your savings for the future, using our CANSTAR Savings Plan Calculator and Budget Planner Calculator.

If you’re struggling to save and would prefer advice on how to budget to meet your regular financial needs, head on over to our Budgeting & Saving guide. You’ll find all our best hints and tips to help you survive and thrive financially.


Common features and fees of savings accounts:

There are a few basic things to look for in a savings account, depending on your financial needs:

  1. High interest rate (beware of high introductory rates that revert to lower rates)
  2. Low fees
  3. Suitable minimum or maximum deposit amounts
  4. Free transactions
  5. Accessibility of branches and ATMs if necessary

Some common fees to look out for on various savings accounts are:

  • Monthly account-keeping fees
  • Branch deposit fees
  • Over-the-counter transaction fees
  • Eftpos fees
  • Electronic transaction fees
  • ATM withdrawal fees, both “own” and “other”

The good news is that most savings accounts won’t charge fees for electronic transfers, and you can usually waive the monthly account-keeping fee simply by depositing a certain amount each month.


What are the current interest rates for savings accounts?

The average interest rates for savings accounts have dropped across the board since February 2015, when the Reserve Bank of Australia lowered the official cash rate to a record low. Since the cash rate is currently holding steady at 2.00%, we had a look at the average interest rates on offer during this low.

Finding the highest interest rate for a savings account is vital when rates are this low. You can compare interest rates for different types of savings accounts on our website.

Online Accounts:

94% of the online saver accounts in CANSTAR’s database dropped their base rates after the February RBA meeting, by about 0.27% on average.

Before cash rate change: 2.48% (ave), 3.25% (max)

After cash rate change: 2.22% (ave), 3.00% (max)

(Rates quoted are assessed on an amount of $5,000.)

Cash Management Accounts:

49 of the 62 cash management accounts dropped their rate by an average of 0.21%.

Before cash rate change: 1.45% (ave), 2.75% (max)

After cash rate change: 1.23% (ave), 2.50% (max)

(Rates quoted are assessed on an amount of $25,000.)

Bonus Accounts:

The total rates (base rate plus bonus rate) for bonus accounts have shown a drop of 0.22% on average.

Before cash rate change: 3.03% (ave), 3.75% (max)

After cash rate change: 2.75% (ave), 3.40% (max)

(Rates quoted are assessed on an amount of $10,000.)

SMSF (Self-Managed Super Fund) Savings Accounts:

SMSF accounts have shown a drop of 0.25% on average off base rates and 0.26% off bonus rates.

Before cash rate change: 2.83% (ave), 3.60% (max)

After cash rate change: 2.57% (ave), 3.35% (max)

(Rates quoted are assessed on an amount of $50,000.)

Junior Accounts:

Kids’ accounts haven’t exactly been spared from changes in the interest they earn, but the drop has been smaller. The total rate has decreased on average by 0.03%. Every bank has a different balancing act between high bonus rates and low base rates for junior accounts, so it definitely pays to do your research on a range of accounts before deciding what would be in your child’s best interest. You can compare Junior Savings Accounts on our website.

Before cash rate change: 2.19% (ave), 5.75% (max)

After cash rate change: 2.15% (ave), 5.50% (max)

(Rates quoted are assessed on an amount of $2,000.)


Written by: TJ Ryan

Savings account customer profiles

When it comes to our star ratings and awards, CANSTAR assesses the savings and deposit offerings for several different customer profiles. We assess 3 transactor profiles and 5 saver profiles outlined here.

  1. Flexible Saver / Online Saver:

Flexible Savers do most of their banking online, but they like to keep their options open so they can visit a branch when they need it. They need an account with a reasonable interest rate, easy access to their money, and no conditions restricting how much interest they can earn on their savings. A flexible account suits them more than locking away their money in a term deposit.

  1. Regular Saver / Bonus Saver:

Regular Savers deposit a certain amount of money per month towards general savings or a specific goal. They can generally earn a good base rate plus bonus interest for making regular deposits. They need a great interest rate, without needing to access their money.

  1. Cash Manager:

Cash Managers are active investors who want to put aside money so that it is available whenever an investment opportunity arrives. They need an account where they can access their money while also earning interest on that money between investments. Cash management accounts allow you to earn tiered interest while you wait.

  1. Junior Saver:

Junior Savers are born when parents help kids to build their own money-handling skills. Having their own bank account teaches them how to deposit and withdraw money, and grow their savings. They need a good interest rate, and an account where relatives can deposit a little boost into the account as well.

  1. SMSF Saver:

SMSF Savers are managing their own superannuation funds for retirement, and this type of account earns interest on the cash component of their investment profile. They need an account with easy access to their funds and a solid interest rate to grow their nest egg. Some banks will waive account fees for seniors and pensioners as an extra perk of reaching maturity.

What is the deposit guarantee?

During the all-consuming GFC, the federal government introduced the Australian Government Deposit Guarantee Scheme. The scheme promoted national financial stability by ensuring that financial institutions had enough funds to continue to run, preventing liquidation. The Financial Claims Scheme remains in place post-GFC as a government guarantee or security on bank deposits (including savings accounts) of up to $250,000 per customer per institution.

The scheme applies to authorised deposit-taking institutions (ADIs), which are approved financial institutions such as banks, building societies, and credit unions. The scheme applies to branches of foreign-owned banks here in Australia, but does not apply to any deposits you might have sitting in overseas branches of Australian banks.

What deposits are covered by the government deposit guarantee?

The Financial Claims Scheme covers a wide range of deposits including:

  • Savings accounts
  • Cash management accounts
  • Call deposit accounts (at-call account or combined savings and checking account)
  • Farm management deposits
  • Term deposits
  • Pensioner deeming accounts
  • Mortgage offset accounts
  • Cheque accounts
  • Deposit accounts
  • Debit card accounts
  • Transaction accounts
  • Trustee accounts
  • Retirement savings accounts (SMSF savings accounts)
  • First home saver deposit accounts

What does the government deposit guarantee mean for me?

The government deposit guarantee means that if another financial crisis strikes or your bank goes insolvent, the government has promised that you will not lose your money. They will pay the bank the amount of money deposited in that bank, so that you can still withdraw your money from the bank when you need. This is especially reassuring if you have retired or are planning to retire soon, because it means your savings for your retirement are relatively protected.

You can check whether your bank’s deposits have been approved for access to the government guarantee using the list of Guaranteed Liabilities. For more information about the Financial Claims Scheme, see the government’s website or APRA’s website on this topic.

Pros and cons of at-call savings accounts deposits

CANSTAR has seen a shift over the past year towards at-call savings accounts and at-call term deposits (advance notice deposits). Customers want to be able to use some of their money and continue to save the rest at the same time.

In 2015, CANSTAR Everyday Banking Award winner CUA told us customers had shifted to preferring at-call term deposits and savings deposit accounts over the past year.


  • The interest changes, so you benefit when the interest rate goes up, unlike the fixed rates of term deposits. With the current cash rate at a historic low, some investors feel there is nowhere to go but up, and they don’t want to miss out if rates do rise.
  • Your money is available for use at any time.
  • There is no minimum deposit amount required to open an account.
  • There is no need to go to branch, so you can manage account entirely online.
  • The account receives compound interest (interest charged not just on the original amount, but on the growing total amount in the account).


  • The interest rate changes, so there’s no certainty about how much your investment will grow.
  • Easy access to your money can mean that you accidentally spend it instead of saving it and earning interest on it.

Whichever type of account you choose, you need a consistently competitive rate to grow your savings. Many customers diversify their investment portfolio by investing part of their money in a savings account and part in a term deposit.

Savings accounts glossary of terms

Please note that these are a general explanation of the meaning of terms used in relation to savings accounts. Your bank or financial institution may use different terms, and you should read your product disclosure statement carefully to understand everything that may apply to your account. You cannot rely on these terms in relation to any savings account you may purchase.

Account-keeping fees: An ongoing fee charged to cover or partially cover the bank’s internal costs of creating and maintaining the account.

Annual equivalent rate (AER): A rate that can be compared between lenders, which shows what the interest rate would be if interest was paid and compounded once each year. Any advertisement for a savings product that quotes an interest rate must also quote the AER so that you can compare what return you could expect over time.

Basis points: A unit of measurement used in financial situations to describe the percentage change in interest rates or the value of a financial product. One basis point is 0.01% or 0.0001 in decimal form.

Bonus savings account: Accounts that give bonus interest whenever the accountholder makes no withdrawals and deposits a certain amount of money into the account (usually around $50 or $100).

BPay: An electronic bill payment system in Australia. Payment of bills is made through a financial institution’s online or telephone banking facility to merchants who are listed on the register of BPAY billers.

Cash management account: A savings account for high balances (usually $10,000 – $20,000) with a higher interest rate and the flexibility of a transaction account.

Compound interest: Interest calculated on the total funds in the bank account, including interest earned, as opposed to only paying interest on the principal amount. Almost all savings accounts use compound interest.

Debit card: A card that is linked to a transaction account and allows the cardholder to make transactions with merchants and withdrawals from ATMs. Also known as a bank card or cheque card.

Deposit: Money that you put into an account with a financial institution.

Direct deposit: When a transaction is automatically removed from an account and received into a different person’s account. For example, wages are automatically removed from an employer’s bank and deposited into an employee’s bank account.

Introductory rate: An introductory bonus offer where a variable interest rate applies to the account for a set time period. At the end of the bonus period, rates revert to the base rates.

Junior savings account: Savings accounts for children. A parent or guardian operates the account in the child’s name but the child also has access to their account.

Online savings account (OSA): A savings account that is primarily managed on the internet.

Promotional rate: An interest rate which is only offered during a specified promotional period. When the promotional period ends, the interest rate will generally revert to the base rate. Similar to an introductory rate.

Savings account: Bank accounts that pay significant interest back to the account holder and cannot be used to make transactions. Savings accounts typically have higher interest rates than transaction accounts. They can be linked to transaction accounts to make savings available as funds for transactions as needed.

Term deposits: An account with a financial institution where money is deposited for a set term (period of time) and earns interest when that term ends. The interest rate is usually fixed for the term of the deposit and is generally higher than a transaction account, but not always higher than some other at-call high interest savings accounts. There are fees charged if the investor withdraws their money before the end of the term. Also known as a fixed deposit.

Transaction account: A deposit account that serves the purpose of providing frequent access to funds in your account for debit card transactions made through EFTPOS at merchants, branches, ATMs, and also for the use of cheques.

Withdrawal: When instructions are carried out to pay money out of your account and it is paid, e.g. getting cash out of an ATM.

Wire Transfer: Instructions to the bank to send funds to a designated account. Similar to a bank transfer.

Yield: The rate of return earned on an investment.

Who offers savings accounts in Australia? These are the providers we research and rate:

  1. ADCU
  2. AMP Bank
  3. ANZ
  4. Arab Bank Australia
  5. Bank Australia (formerly known as bankmecu)
  6. Bank of Melbourne
  7. Bank of Sydney
  8. BankSA
  9. BankVic
  10. Bankwest
  11. bcu
  12. Bendigo Bank
  13. Beyond Bank
  14. BOQ
  15. Cairns Penny
  16. Catalyst Money
  17. Citibank
  18. Coastline Credit Union
  19. Commonwealth Bank
  20. Community First Credit Union
  21. Community Mutual Group
  22. CUA
  23. Defence Bank
  24. Delphi Bank
  25. Easy Street Financial Services
  26. ECU Australia
  27. Encompass Credit Union
  28. FCCS Credit Union
  29. First Option Credit Union
  30. G&C Mutual Bank
  31. Gateway Credit Union
  32. Greater Building Society
  33. Heritage Bank
  34. Holiday Coast Credit Union
  35. Horizon Credit Union
  36. HSBC
  37. Hume Bank
  38. Hunter United
  39. Illawarra Credit Union NSW
  40. IMB
  41. ING Direct
  42. Intech Credit Union
  43. Macquarie Credit Union
  44. ME Bank
  45. MyState
  46. NAB
  47. Newcastle Permanent
  48. Northern Beaches Credit Union
  49. People’s Choice Credit Union
  50. P&N Bank
  51. Police Bank
  52. Qantas Credit Union
  53. Qld Police Credit Union
  54. Qld Professional Credit Union
  55. QT Mutual Bank
  56. Quay Credit Union
  57. Queenslanders Credit Union
  58. Rabobank Australia
  59. RaboDirect
  60. RAMS
  61. Rural Bank Ltd / Rural Bank ONE
  62. SCU
  63. Select Credit Union
  64. SERVICE ONE Alliance Bank
  65. George Bank
  66. Summerland Credit Union
  67. Suncorp Bank
  68. Teachers Mutual Bank
  69. The Capricornian
  70. The Mac
  71. The Mutual
  72. The Rock Building Society
  73. Transport Mutual Credit Union
  74. UBank
  75. Unicredit WA
  76. Victoria Teachers Mutual Bank
  77. Westpac
  78. Wide Bay Australia

For more information on how CANSTAR rates savings accounts, read our latest star ratings report.