A high interest savings account is an account specifically designed to help you visualise and meet your savings targets. Most high interest savings accounts are online accounts to reduce the temptation to spend your savings, and most will also be fee free so you can set up your savings plan and not worry about your money being eaten away. However, banks and financial institutions know that everyone has a different saving and spending personality and therefore, there are a range of high interest savings accounts with features to further curb temptations if required, or to reward you if you are able to boost your savings.

To compare the high interest savings accounts which will best help you maximise your savings:

  • Decide why you are saving and why you need a high return – it’s alright to have more than one savings goal.
  • Be honest about your savings behaviour and whether you will be tempted to dip into your savings.
  • Look carefully at your lifestyle and income and decide whether you need access to your high interest savings account as an emergency fund.
  • Choose the high interest savings account with an interest rate, access and fee structure which suits all of these facets of you and your financial personality.


Why Compare High Interest Savings Accounts

While all high interest savings account aim to offer the highest returns to savers with the least paperwork, effort and fuss, that doesn’t mean you don’t need to carefully compare the products. In the same way you wouldn’t sign up for the first home loan you read about or buy the first car you test drove, don’t sign up for the first high interest savings account you see, until you have compared the features.

If you compare savings accounts you can maximise your interest earned:

  • If you won’t make withdrawals, be rewarded. If you know you can avoid making withdrawals from your high interest savings account after setting up a regular savings plan, then choose a high interest savings account which will reward you with an even higher interest rate when you make only deposits.
  • If you need emergency funds, don’t be penalised. If you find you have to dip into your savings to cover emergencies because your life is not in a smooth and straightforward place right now, then choose a high interest savings account which offers you a high interest rate regardless of the balance, the number of deposits, and the number of withdrawals.
  • Choose a flexible interest rate because rates are rising. The Reserve Bank has made no secret of more interest rate rises to come into 2010, so choose a high interest savings account from a financial institution which guarantees to follow the RB’s interest rate on their savings account returns.
  • Don’t pay fees on your funds. If you make some smart comparisons you can find a high interest savings account which won’t charge you fees for the way you use your account. Where most high interest savings accounts are fee free, some must be linked to an external personal account from which you transfer your savings. As a result, some of these external accounts may charge you fees to set up a direct transfer to your savings, or charge you when you make a high number of deposits. Therefore, choose a high interest savings account which can stand alone, or which can be linked to another fee free (or low fee) account.
  • Maximum interest is calculated daily. You may be surprised to learn that you can maximise your savings simply by choosing a high interest savings account which calculates interest daily. When interest is calculated daily, it is calculated as compounding interest, so you are earning interest on your interest throughout the month.

How to Compare Interest Rates

The interest rate earned on your high interest savings account is one of the most important features, but to truly compare the best interest rate, you will have to read the fine print, so we have enlarged it for you here:

  • Is the interest rate a promotional one? Many financial institutions will run specials on their high interest savings accounts and offer special higher interest rates, which are set to expire. Therefore, it pays to compare when that promotional rate will end, and if you have to sign up before a certain date – at the same time, don’t be rushed into signing up for a high interest savings account because of a high interest rate, read the rest of the fine print we’ve enlarged for you here.
  • Is the interest rate introductory? Similar to a promotional interest rate, an introductory interest rate won’t expire on a certain date, but will expire a certain number of months after you have opened your account, so beware when the time runs out.
  • Is the interest rate conditional? Some high interest savings accounts will require that you make a certain amount of deposits in a month, maintain a certain balance, or make no withdrawals in a month to be eligible for their highest interest rate. If you don’t meet these requirements, you may suffer a much lower interest rate.
  • How is the interest rate calculated? While you should be looking for an account with interest calculated daily, you should also find out what that interest rate is made up of – for example, some banks and financial institutions will base their interest rate directly on the RBA’s cash rate, while others will use their own standard variable rate as the interest rate for their high interest savings accounts. Still other financial institutions will use either the cash rate or a standard variable rate, and combine that with an additional rate to create a special rate for their high interest accounts. Knowing how your interest rate is calculated will allow you to gauge when, if and by how much it might change.

At Savings Account Finder we have read all of the fine print and more to offer you in depth comparisons of all high interest savings accounts available to Aussie savers. We have also compiled savings tips and advice to help you choose the account which best suits you and will help you maximise the interest earned on your savings. All you have to do is look over our product reviews and sign up securely online to start achieving your savings goals.

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