Deposits in savings accounts are being eroded by inflation as banks continue to slash interest rates - but there are still some savings accounts on the market with good rates. A key component of savings account interest is the base rate.

This article will explain what a base rate is, how it’s different from other savings account rates, and why it’s important to keep your savings interest rate above inflation, which is getting harder to do.

Compare savings accounts with the highest base rate

The table below displays a selection of some of the highest base rates on savings accounts.

Provider

4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
More details
  • Bonus rate for the first 4 months from account opening
  • No account keeping fees
  • No minimum balance

High Interest Savings Account (< $250k)

  • Bonus rate for the first 4 months from account opening
  • No account keeping fees
  • No minimum balance
010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
More details
  • Earn up to 5.40% pa by depositing $1,000 in the previous month
  • No account fees
  • Easy access to your money

Saver Account (<$250k)

  • Earn up to 5.40% pa by depositing $1,000 in the previous month
  • No account fees
  • Easy access to your money
4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
More details
  • A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking
  • No withdrawal notice periods or interest rate penalties

Savings Account (Amounts < $250k)

  • A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking
  • No withdrawal notice periods or interest rate penalties
02000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
More details
No monthly fees
  • Download the App to open your account
  • Get better visibility of your spending within App!
  • Deposit $200 per month to activate bonus interest
No monthly fees

Save Account

  • Download the App to open your account
  • Get better visibility of your spending within App!
  • Deposit $200 per month to activate bonus interest
Important Information and Comparison Rate Warning

All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of June 16, 2024. View disclaimer.

What is a base interest rate?

A base interest rate is the default interest rate that all account holders will earn on a particular savings account.

According to Savings.com.au’s research, the highest base rate on the market is currently 3.50% p.a. for a children’s savings account, which tend to have higher interest rates than adult savings accounts. The highest base rate for an adult savings account is currently 1.20% p.a, while the average base interest rate for most savings accounts is generally between the 0.50% to 0.80% mark. If you’re a customer of the big four it’s even worse, as the average base rate on savings accounts across the big four banks is just 0.05% p.a at the time of writing.

If that sounds pitifully low it’s because it is. Interest rates on savings accounts have been plunging over the last couple of years thanks to multiple cash rate cuts by the Reserve Bank. Since 2019, the cash rate has been cut six times. As of March 2021, the cash rate is just 0.10%, while the current rate of inflation is 0.90%.

This means that if the total interest rate on your savings account is lower than 0.90% p.a, your money is basically going backwards. Savings that aren’t growing at or above the rate of inflation results in your money essentially decreasing in value over time.

See also: How inflation affects your term deposit and savings account returns.

How are base interest rates different from bonus interest rates?

A bonus interest rate is usually offered on top of the base rate, either as an introductory rate (also known as a honeymoon rate) or as a conditional rate, which you can only earn by meeting certain conditions like:

  • Depositing $X amount of money into your savings account every month

  • Making no or limited withdrawals every month

  • Making a certain number of transactions every month using the linked transaction account

  • Having a linked transaction account with a certain amount of money deposited into it every month

Sometimes you may have to meet a combination of these requirements to earn the bonus rate.

The table below displays a selection of savings accounts with some of the highest bonus rates on the market (age limits may apply).

Provider

4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
More details
  • Bonus rate for the first 4 months from account opening
  • No account keeping fees
  • No minimum balance

High Interest Savings Account (< $250k)

  • Bonus rate for the first 4 months from account opening
  • No account keeping fees
  • No minimum balance
010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
More details
  • Earn up to 5.40% pa by depositing $1,000 in the previous month
  • No account fees
  • Easy access to your money

Saver Account (<$250k)

  • Earn up to 5.40% pa by depositing $1,000 in the previous month
  • No account fees
  • Easy access to your money
4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
More details
  • A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking
  • No withdrawal notice periods or interest rate penalties

Savings Account (Amounts < $250k)

  • A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking
  • No withdrawal notice periods or interest rate penalties
010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
More details
  • Deposit at least $1,000+ each month from an external source
  • Make 5 or more eligible transactions
  • Grow your savings balance each month

Savings Maximiser (<$100k)

  • Deposit at least $1,000+ each month from an external source
  • Make 5 or more eligible transactions
  • Grow your savings balance each month
02000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
More details
No monthly fees
  • Download the App to open your account
  • Get better visibility of your spending within App!
  • Deposit $200 per month to activate bonus interest
No monthly fees

Save Account

  • Download the App to open your account
  • Get better visibility of your spending within App!
  • Deposit $200 per month to activate bonus interest
020000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
More details

HomeME Savings Account ($0 - $100,000)

    010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
    More details

    Boost Saver

      01000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
      More details

      Bonus Saver Account (Amounts < $100k)

        3000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
        More details

        Everyday Savings Account

          5000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
          More details

          NetBank Saver

            3000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
            More details

            Maxi Saver

              00.010$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
              More details

              Life

                3000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
                More details

                Maxi Saver

                  010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
                  More details

                  Smart Saver Account ( < $250k)

                    3000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
                    More details

                    Maxi Saver

                      3000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
                      More details

                      Online Savings Account

                        03000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
                        More details

                        Bonus Savings Account

                          4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
                          More details

                          iSaver

                            4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
                            More details

                            Bonus Saver ($0+)

                              02000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
                              More details

                              Bonus Saver (<$1 Million)

                                Important Information and Comparison Rate Warning

                                All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of June 16, 2024. View disclaimer.

                                Savings.com.au’s two cents

                                When choosing a savings account, looking for a high base rate is definitely important but it’s not the only thing to look out for. You also want to make sure the savings account doesn’t have any monthly account keeping fees as these will eat into your savings. There are so many savings accounts on the market that don’t have any account keeping fees, so it wouldn’t make sense to choose an account that does.

                                You should also consider what features you want in a savings account, such as the ability to link multiple sub savings accounts for different savings goals.

                                Photo by Vanessa Lee on Unsplash