Despite the cost-of-living crisis, Australians remain committed to increasing their savings, according to a recent report by NAB. On average, the report found that Australians have around $34,000 in savings—but this figure varies significantly by age, gender, location and income.
“Nearly three quarters (73%) of Australians are trying to build their savings…” the NAB report stated.
To do so, many Australians are turning to savings accounts that allow them to grow their savings faster—whether it be via a term deposit or a high-interest savings account. Let’s take a closer look at some of the savings accounts on offer.
Types Of Savings Accounts
There are many different types of savings accounts available to Australians, each with different benefits and conditions.
Below we outline the main types of savings accounts, however, it’s important to note that banks and financial institutions all differ in their offers, as well as in their T&Cs, so it’s imperative that you research the product thoroughly before committing to an account.
Online Savings Accounts
An online savings account is simply an account that is based primarily online, and is only accessible via web or mobile devices (meaning that you cannot go in-branch to access your funds or make enquiries). These accounts usually have a standard interest-rate, which is paid out every month regardless of your deposit or withdrawal frequency.
Online savings accounts are minimum-effort accounts that you don’t need to think about while your funds can grow in the background. There are usually minimum and maximum deposit limits, though.
Bonus Interest Savings Accounts
Bonus interest savings accounts are similar to online savings accounts, however, they also offer a “bonus” interest rate for meeting monthly criteria. This criteria varies by account and/or financial institution, but usually includes a minimum amount of transactions, growth of your balance compared to the previous month, a certain deposit each month, and more.
If you meet this criteria, you will receive the base interest rate in addition to the bonus interest rate, equalling the total interest rate. For example, your base interest rate may be 0.05%, while the bonus interest rate may be 5.10%. This means if you meet the bonus criteria, you’ll make 5.15% that month.
If you don’t meet the criteria, you’ll only receive the base interest rate for that month. Often, this is significantly lower than what the total interest rate could be with the bonus—as per the above example.
Related: Our Pick Of The Best Savings Accounts In Australia
High Interest Savings Accounts
According to another NAB report, more than half of all Australians are stashing their cash in high-interest savings accounts (55%).
“New NAB data released today reveals nearly two thirds of younger Australians between 18 and 29 years old have placed their savings in a high interest account, compared to just half of Australians aged over 30,” the report from March 2023 stated.
“High interest savings accounts can be a safe, smart and stable way to manage your money, providing ready access to funds if they’re needed as well as a rewarding interest rate,” NAB Personal Banking Executive Kylie Young said.
Maya McIntyre, 22, from Victoria keeps her savings in a high-interest account, where she’s continuing to grow her balance thanks to higher interest rates.
“It’s really important to me to be able to save money now and put it away for the future, whether that’s a house, a holiday or money for a rainy day,” she said.
“I want to be able to see my funds and access them easily if I need to, and at the same time get the interest paid monthly.”
High interest savings accounts are similar to bonus interest rate accounts due to their high interest rates. However, the main difference with high interest savings accounts is there is only one interest rate that doesn’t require monthly criteria to be met in order to receive the interest rate.
Introductory Interest Savings Accounts
An introductory interest savings account offers a much higher interest rate than the market average, however, it only lasts for a short period of time, usually between four and six months. . This brings customers in, but may not be viable for long-term savings growth.
I want to be able to see my funds and access them easily if I need to, and at the same time get the interest paid monthly
This is because once the introductory period ends, the normal interest rate offered by the account is usually lower than what is available elsewhere. For example, Macquarie Bank offers an introductory saver account with a 5.55% interest rate for the first four months—reverting to 4.50% once this introductory period concludes.
There may be other conditions to be aware of as well, such as deposit limits or age brackets.
For long-term savers, you may wish to shop around after the introductory first four months in order to continue saving at a high interest rate.
Round-Up Accounts
Round-up accounts allow Australians to grow their savings while making daily transactions on their eligible transaction cards. These work by being linked to your transaction card and then, depending on what amount you’ve nominated, rounding up every transaction to their nearest dollar, $5, $10 and so forth. This round-up amount is then transferred to your linked savings account.
This means if you make a $17 purchase and choose to round up to the nearest $10, the purchase amount would round up to $20. The extra $3 would then be transferred to your savings account, while the $17 would go towards the merchant.
Round-up features are offered by many of Australia’s main backs, with the feature available to be turned on or off at any time.
Term Deposits
According to NAB, term deposits are four times more popular with older Australians (aged 65+, 29%) than younger Australians (aged 18-29, 7%) due to their ability to offer a “guaranteed, set income”.
Related: Our Pick Of The Best Term Deposits In Australia
Ultimately, a term deposit is a type of savings account that you can’t access for a specific period of time, with the reward being a fixed rate of interest paid out at the end of the term (or on a monthly or annual basis, depending on your bank). If you withdraw early, you will likely incur a financial penalty.
A term deposit usually requires a minimum amount of money before you can open an account (usually around $5000-$10,000), with the terms typically ranging from a month to five years.
The longer the term; the higher the interest rate you earn.
To find out more about the benefits and conditions, read our guide to term deposits here.
How To Compare Savings Accounts
There are many factors to consider before opening a savings account. The first would be your eligibility to open the account, considering some may have age restrictions such as being targeted towards younger age groups, or having minimum age requirements as well.
You will also need to consider whether there are any deposit limits, and if so, whether you have that money available to put away in savings. Often, there are upper deposit limits, which is also a consideration you must make—there’s not much point putting money into a savings account if you are wanting to contribute more than they will allow you to deposit.
Other factors include conditions, such as those attached to bonus interest rates, introductory offers or the length of terms for term deposits. Of course, you should also consider the interest rate available and how it stacks up against the rest of the market. If you’ve had your money in a savings account for many years, it could be worth researching other products on the market to see how your current rate compares.
Ultimately, there are a lot of different factors to consider when choosing to put your money into a savings account. Don’t be afraid to do your research and move your funds if necessary, Young encourages Aussies.
“It’s a very competitive market for savers, so now is a great time to shop around and find the best rate and product features that work for you,” Young said.
Frequently Asked Questions (FAQs)
What kind of savings account should I open for my baby?
Since most savings accounts have a minimum and maximum age attached to them, you’ll have to find a savings account that suits your baby’s age and needs. Not all banks or financial institutions offer savings accounts for babies or children, so you may need to shop around.
Are there different types of savings accounts?
Yes, there are many different types of savings accounts for Australians to choose from. This includes online savings accounts; high-interest savings accounts; bonus interest accounts; term deposits; introductory savings accounts; round-up accounts; and more.
What savings account should I have?
There is no right or wrong savings account to have. Instead, the best type of savings account for you is the one that you will be able to meet the criteria for, and will grow your savings by offering a good interest rate. Whether that’s via a term deposit or a round-up account completely depends on your own financial situation.
