Compare Bonus Interest Savings Accounts

What is a bonus interest rate on a savings account?

The bonus rate is an interest rate that savings accounts offer on top of their base rate. Banks structure these accounts in such a manner that the bonus rate is either offered as an introductory rate or as a conditional rate meaning certain conditions must be met each month before you can qualify.

Such conditions vary across banks, however these range from:

• Depositing a certain amount into your savings account every month.

• Making no or limited withdrawals every month.

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

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

• Keeping your savings account balance above or below a set threshold.

It’s not unusual for some savings accounts to require you to meet a combination of these requirements every month in order to earn the bonus interest rate. For example ING’s ever-popular Savings Maximiser requires you to deposit a certain amount each month into a linked transaction account, alongside making a minimum of five card transactions and growing your account balance from the month prior.

Savings accounts with bonus interest rates can be attractive for those saving towards a goal, yet want to be rewarded for their consistent savings habits. These accounts are more likely to offer higher total interest rates (base rate + bonus rate) than savings accounts that don’t offer a bonus rate.

Before you choose a savings account, find out whether the account is eligible to receive a bonus interest rate, and what conditions must be met each month in order to earn the maximum bonus rate. Some bonus rates are only available for a limited period of time - aka an introductory rate or a honeymoon rate - so while the bonus rate might make the savings account look really tempting, the base rate could leave much to be desired.

Comparing bonus interest rate savings accounts

Interest rate

The purpose of a bonus interest savings account is to boost the balance of your savings by letting the power of compound interest work its magic. Each bank will offer different bonus interest rates with different conditions, so be sure you factor in whether you are able to first meet these conditions before opening an account.

Monthly fees

Savings accounts are generally fee-free products, however some banks may charge you annual fees and withdrawal fees. To benefit your savings most, it’s important to first check whether the bank charges fees before opening an account.

Usability

If you are required to make monthly deposits to meet bonus interest rate conditions, it is important that you can easily access and transfer funds into your account. You may wish to set up regular transfers to make sure you meet the bonus rate criteria. Having an account that offers digital banking through a mobile app, as well as account access through online and phone channels allows you maintain control over your savings.

Some savings account considerations

Once you're sure you're looking at savings accounts, you'll need to do a little more investigating before simply plugging your money into the product with the highest advertised interest rate. That number may be the best rate the account will get you, but it doesn't mean you'll automatically receive it.

For a start, some savings accounts come with eye-catching introductory or honeymoon interest rates that typically feature in large font. These generally last for a fixed period (usually three or four months) before reverting to a less-dazzling rate.

Other savings products may just hit you with their top rate - also known as the bonus rate - and it will be up to you to find out how to achieve it. The terms and conditions will generally be set out somewhere in smaller print.

If you don't meet the specified requirements, you will end up being paid what's called the base interest rate. This can be around 0.00%-0.05% p.a. which isn't too flash at all.

For more information, see The different types of savings account interest rates

What are some common conditions for achieving bonus interest rates?

Savings accounts that come with conditions in Australia typically have one, two, or a combination of the following:

• Customers must deposit a set amount into their accounts each month (generally from an external account)

• Customers must have a linked transaction account where a set amount must be deposited each month (also generally from an external account such as an employer depositing wages or salary)

• Customers make a certain number of transactions each month using a linked transaction account

• Customers make no - or limited - withdrawals in a month

• Customers must grow their savings account balance over the month (excluding interest earnings)

How to make sure you get your savings account's bonus rate every month

When you choose a savings account product, you need to be honest with yourself. How reliable will you be ensuring you meet your account's requirements to get paid the maximum interest rate every month?

It seems many Australians aren't exactly on the ball. A study by the Australian Competition and Consumer Commission in 2023 found 71% of all savings accounts with a conditional interest rate didn't receive the bonus rate during the study period.

Its report calculated Aussies were missing out on billions of dollars of interest on savings each year because of conditions that are difficult for customers to meet and keep track of.

The report recommended banks and other ADIs be made to alert their customers to give them a chance to meet bonus conditions. So far, few have moved to implement that (although some have so we'll talk more about those soon.)

In light of that, before you go signing up to a dazzling savings account interest rate, you need to assess your own suitability as a depositor.

Tips on how to meet bonus rate conditions

Automate deposit requirements

When you set up your account, automate as much as possible to ensure your default has you achieving the bonus rate every month. Make sure the minimum deposit amount is coming in either directly from your employer, or another account where you hold funds. You'll also need to pay attention if the minimum deposit amount changes and adjust accordingly.

Automate transaction requirements

If you need to make a set number of transactions a month to receive bonus interest, set up some automatic payments to come from the account (or a linked transaction account, depending on the conditions). These can be regular smallish weekly or monthly payments such as subscription services like Spotify or Netflix, gym membership, mobile phone, health insurance, etc. Alternatively, get into the habit of using that account for fairly regular transactions such as buying coffee or a weekly grocery shop to give yourself the best chance to hitting the minimum transaction target.

Have another account

If the account has a no - or limited - withdrawal condition, make sure it's your rainy-day or emergency savings account and not one you'll be needing to dip into too often. You'll also need to judge how much you can feasibly deposit into it each month without starving. You may want to consider splitting your savings between a high-interest and an unconditional savings account (more on these below) so you can more easily - and cheaply - access your savings if you think you'll need to.

Set up your own alert system

Some banks may provide alerts or offer in-app facilities to check on your bonus-saving progress (more on this below) but the vast majority don't. This is where you may need to set up your own system, using your phone calendar or another method, to prompt you to check on whether you're on track to earn bonus interest that month. Make sure you give yourself enough time to act before the cut-off date and be clear on exactly what you need to do to ensure you achieve the maximum interest.

Unconditional savings accounts

If you're not a detail person or your life is busy enough, you may be better off searching for an unconditional savings account that still offers a decent rate. It likely won't be as high as the maximum rate offered on a conditional account but if you're guaranteed of getting it every month, it may work out that you earn more in interest each year than if you'd signed up for the bonus interest account and only got the maximum rate every so often.

Most institutions offering a high-interest savings account with conditions will also offer an unconditional savings product so it's worth checking those rates too.

One thing you may need to keep an eye on with unconditional savings accounts is whether they offer an introductory rate and what it reverts to after the honeymoon period is over. Many also come with balance caps so make sure you match the product to the amount you'll be looking to keep in the account to maximise your interest.

See also: Quick Guide to Macquarie Bank Savings Accounts

Which banks alert customers to their bonus savings rate eligibility?

Each of the big four banks say they prompt customers to help them achieve bonus interest rates although not all make clear exactly how and when they do this and, more importantly, how effective it is.

In May 2024, Westpac introduced a new mobile phone push notification system to alert their customers on how to earn bonus interest. Westpac said its prompts are designed to help customers better understand opportunities to earn bonus interest and allow them to act quickly.

NAB's digital-only bank Ubank also says it issues "friendly nudges" to help its customers achieve bonus interest on their high-interest savings account product.

Other banks say there are features within their apps to allow customers to check on their eligibility to achieve bonus interest. But there is a difference between a checking facility and an alert. If you're the type that needs alerting, consider those savings account products that offer real-time alerts.

The ACCC had recommended banks offer clear communications and information to their customers if they were about to lose entitlements to their bonus interest. By choosing an institution that does this, you are also sending a message to other deposit-takers that they may need to do the same to get your cash.

The ACCC also recommended banks conduct annual assessments of their customers' success in achieving bonus interest rates and suggest whether other products may better suit their needs. It is unclear whether any institution has taken up this recommendation. Certainly, none has announced it has done so.

How do base and introductory rates differ from bonus rates?

The base rate is the default interest rate that account holders will earn without needing to meet any requirements.

The introductory or honeymoon interest rate is a temporary bonus interest rate that is usually only offered in the first few months of opening the account. Introductory interest rates are often quite high to entice new customers to open up an account - but the rate it reverts to, the base rate, can be quite low so it’s worth checking before signing up.

Banks such as Macquarie and Rabobank currently offer 4-month introductory rates as a temporary bonus interest rate. After the completion of the 4-month period, the rate reverts back to the base rate.

Savings.com.au’s two cents

A savings account with a high bonus rate can offer a great way to take advantage of the powers of compound interest if you are trying to achieve a specific savings goal. Before you sign up for a savings account with a high bonus rate, it’s important to determine whether the rate on offer is simply an introductory rate or a conditional rate, as well as the requirements to earn that bonus rate each month.

When it comes to choosing a savings account, a high interest rate isn’t the only thing to look out for. As outlined above, you should take into account any fees that could potentially arise as well as the usability of the savings account. Consider what features are necessary in order to achieve specific savings goals and whether or not the account is designed to help get you there. At the end of the day they are your savings, so its important you choose the option that will benefit your finances most.