Earning interest on your savings is just like getting something for nothing, in fact, it's exactly like getting something for nothing because using a high interest savings account and depositing your savings is so easy when you open an online account, you really will feel like you're doing nothing, but your savings are growing.
Ways your savings can earn interest:
- High interest savings accounts calculate interest daily and pay monthly.
- Your savings earn compounding interest when interest is calculated daily as you are earning interest on your interest.
- You can earn bonus interest for additional or regular deposits.
- You can be rewarded with bonus interest for not making any withdrawals.
- You can be offered bonus interest to roll over your savings or continue your savings after reaching your initial goal.
How to Find Interest Bearing Savings Accounts
Not all savings accounts will earn you interest, just because an account has 'savings' in the name, doesn't make it a high interest savings account. Therefore, you need to choose an account which has been specifically designed to be interest bearing , that is, one which will earn you interest on your savings.
To find the best interest bearing savings account:
- Compare high interest, online savings accounts. These are the accounts which will earn you interest, as opposed to your everyday savings account which simply allows you access to your funds at an ATM or by using EFTPOS. Use the Savings Account Finder high interest savings comparison tables to get you started.
- Choose the account which will reward you with interest and bonus interest for the way you save. High interest savings accounts are able to earn you even more interest if you meet the bonus criteria. Depending on the bank and the savings account you may earn more interest for making regular deposits, for making deposits to a certain value, or when you don't make withdrawals from your account. If you think you can follow any of these simple savings plans then you can choose a high interest savings account which offers you even higher interest earning capabilities.
- Choose a savings account which aligns with your savings goal amount and deadline. The type of goal you are saving for can affect the high interest savings account you choose because some accounts will require a minimum balance for you to earn interest, others will reward you when you reach your previously entered savings goal and others will offer you an ongoing high interest rate which can be particularly good if you are saving for a long term goal, or accumulating an emergency fund.
Comparison of Interest Bearing Savings Accounts
How Interest Bearing Can Be Affected
To make sure you are earning the maximum interest on your account, you need to know about some of the instances where your account may be non-interest bearing, depending on the account you choose.
Your interest may be affected in a savings account which:
- Earns low or no interest when you make a withdrawal. To encourage you to only make deposits into your savings account and leave your savings alone until they've reached their goal amount, some banks will calculate a lower interest rate on your balance in the months you make a withdrawal. Often this applies to your balance for the entire month, regardless of when you make the withdrawal.
- Does not meet a minimum balance. Some savings account will require that you maintain your balance above a certain amount each month, to make you eligible to earn the high interest rate.
- Requires a minimum number or amount of deposits to be made in a month. This is another incentive by the bank to encourage you to regularly save and if you are able to set up a regular transfer of the required amount each month, you can earn a higher interest rate on your account.
- You access off-line. High interest savings accounts are able to offer such high rates because they are internet based accounts. An internet savings account can be opened and operated entirely online, meaning little to no contact with the bank, savings for the bank on staff hours, and savings which they can pass onto you. If you instead need to access the account in branch, you can be charged fees on your normally fee free internet savings account, and this will eat into your interest earned for that month.
- These are some instances where your savings interest rate may be lower on some accounts, but these conditions also give you the chance to earn higher or bonus interest if you think you can stick to a particular savings plan or interest goal.
Interest rates on savings accounts are fluid because you are enjoying both the flexibility of an internet savings account, coupled with the ability for the interest rates to rise as the Reserve Bank of Australia increases the official cash rate. However, by comparing the ways banks calculate and pay interest rates on your savings account, you can ensure you are earning the maximum rate, not matter what.