How to compare savings accounts

Start with the conditions

Two savings accounts might advertise the same interest rate but have very different rules. One may need you to deposit money every month. Another might reduce the rate if you withdraw. It’s worth checking what you actually have to do to earn the advertised rate.

Compare more than the headline number

Record the ongoing rate, any temporary introductory rate, deposit and withdrawal rules, maximum eligible balance, account fees and whether access is easy when needed. Also check that the institution is authorised to take deposits in Australia.

Make interest concrete

As a simple illustration, A$5,000 at 4% a year is about A$200 in gross interest over a year if the balance and rate stayed constant, ignoring compounding and tax. Actual rates change; this is not a current offer or expected return.

A higher advertised rate can still pay less

Imagine Account A advertises 5% but only if you deposit A$1,000 each month and make no withdrawals. Account B pays 4.5% without those conditions. If you'd often miss Account A's bonus rules, its advertised rate might not be the rate you actually earn. An introductory offer can create a similar problem once the introductory period ends.

The right comparison is the rate you're realistically eligible to receive, not the biggest number on the page. Interest is generally taxable income in Australia, so gross interest isn't always the amount you keep.

Use a quick account comparison

1. Pick two or three accounts and open their official terms, not just a comparison advertisement.
2. Record the standard rate, bonus rate, conditions, balance cap, fees and how quickly you can withdraw.
3. Estimate interest using your likely balance and the rate you're confident you can meet.
4. Check whether the deposit taker is covered by the Financial Claims Scheme, and note if different brands share the same banking licence.

For an emergency fund, quick access may matter more than squeezing out an extra fraction of a percentage point. Review rates when your needs or the bank's terms change.