Bonus Rate Savings Accounts

Bonus Rate Savings Accounts are designed to reward savers who are committed to adding to their savings on a regular basis, usually monthly. The reward offered by the banks is a Bonus Interest rate that is added to your standard variable rate each month you meet the Bonus Rate conditions.

Two Bonus Rate conditions are common to the majority of the Bonus Rate Savings Accounts:

  1. Make a minimum deposit into your account each month, the amount of this deposit ranges from $10 up to $300.
  2. Make no withdrawals from your savings account during the month

Each month you meet these conditions your account will receive the bonus interest rate on top of the standard variable rate. Some Bonus Interest savings Accounts feature a ceiling amount above which the bonus amount is no longer paid, these ceiling amounts range from $250,000 up to $5 million.

A selection of Bonus Rate Savings Accounts are featured in the comparison table below along with our monthly interest calculator which is designed to help you assess the savings accounts based on how much interest you will earn each month given the amount you choose to deposit.

Comparing the Best Bonus Rate Savings Accounts

To maximize the interest you earn on your savings you will want to ensure that the bonus rate on your savings account is applied to your savings each and every month, here we provide some hints on tips on how to make sure you earn the most interest from these Bonus Rate Savings Accounts.

 

Bonus rate - The bonus rate is added to the standard variable rate of your account each month you meet the conditions set by the account provider, so if your standard variable rate is 0.5% p.a. and your bonus rate is 2.5% p.a. having met all the conditions you will earn an interest rate of 3% p.a. for that month. This rate is often referred to as the maximum variable rate. If you failed to meet all the conditions associated with the bonus rate, you would generally earn interest at the rate of 0.5% p.a., though some accounts have more severe penalties by reverting the interest rate to 0.1% or even 0% when the conditions are not met.

Bonus Rate Conditions - Two conditions are common to all Bonus Interest savings Accounts. The first is that you must make no withdrawals during the month and the second is that you must make a deposit, usually above a minimum value, each month. If these conditions don't fit your saving style an alternative worth considering, with less restrictions, but high rates are Introductory Savings Accounts.

Minimum opening balance - When you initially open a Bonus Rate Savings Account you may need to deposit a stipulated amount to qualify for the bonus rate, if your balance is below this you will only earn interest at the accounts standard variable rate.

Accessing you Account - Some Bonus saver Accounts are accessible only through a linked transaction account, while others operate like a transaction account and provide access via an included debit card. The majority of these Bonus Saver accounts focus on providing access via internet and phone banking in an effort to keep costs down and interest rates high.

Balance amounts - Most Bonus Saver Accounts pay the bonus rate on the entire balance held in your account whilst some place a ceiling on the amount they pay the bonus rate on, with any amounts above this receiving a lower rate of interest which is generally the accounts standard variable rate.

Account fees - These accounts generally do not charge a monthly fee to administer the account, though some accounts do charge a fee for any transactions made on the account, which is generally in the range of $2 - $2.50 per transaction.

Age to Apply - Most of these accounts will accept applications from any Australian Resident or Citizen who are at least 12 years old.

 

Applying for a Bonus Rate Savings Account

First check your eligibility

  • Age requirement - Generally you must be at least 12 years old
  • Residency requirement - Applicants need to be permanent Australian residents with a residential address in Australia.
  • Contact details - An e-mail address and phone number will be requested during the application, this will be used by the provider to keep you updated on the status of your application.

Documentation that will be requested by your provider

  • Identification documents - A photo ID is required which can be your Driver’s license or passport.
  • Tax File Number - This is not compulsory though will make your tax return easier at the end of the year, as any interest earned on your savings maybe subject to tax.

Frequently Asked Questions

If I fail to meet the Bonus Interest Conditions in one month will I qualify for the Bonus rate in subsequent months?

It's important to note that if you're not eligible for the interest for one month, it doesn't mean that you won't receive it for the next. Any month you meet the conditions, you'll qualify to receive the bonus interest.

Will I receive the Bonus Interest Rate on the Full balance of my account?

Most Bonus Savings Accounts pay the bonus rate on the entire balance held in your account. A small minority of accounts include a ceiling on the amount they pay the bonus rate on, with any amounts above this amount receiving a lower rate of interest, which is generally the savings accounts standard variable rate. The ceiling amounts range from $250,000 up to $5 million.

What is the minimum age to open a Bonus Rate Savings Account?

You must be 12 years of age to open a Bonus Rate Savings Account.

What is the difference between a Bonus Rate Savings Account and an Introductory Rate Savings Account?

Introductory Rate Savings Accounts are designed to offer a higher interest rate in the early months of opening the account, generally this is the first 3 months. This higher interest rate is offered to new account holders and comes with no conditions. Bonus Rate Savings Accounts similarly offer a higher interest rate though the rate is not for a fixed introductory period. The higher interest rate, including the Bonus Interest, is applied to the account so long as the account holder meets some conditions. These conditions generally focus on how the account is used, with the Bonus rate typically applying each month that at least 1 deposit and no withdrawals are made.

Introductory Rate Savings Account, including the Introductory interest rate, tend to offer higher rates than Bonus Rate Savings Accounts, albeit for a limited introductory period which is usually 3 months.

Will any interest I earn on my savings need to be declared in my tax return?

Yes the total amount of interest you earn in each tax year will need to be included in your annual tax return. When you open a bonus savings account you maybe requested to provide your Tax File Number, if you provide it at the application stage it will simplify the process of paying tax on any interest you earn from your savings.

What is the Government Guarantee?

The Australian Government Guarantee Scheme was designed to promote financial system stability in Australia. On 1st February 2012, the amount was changed to $250,000 per person, per institution. In the case of a financial crisis in Australia, these amounts are insured by the Australian Government.

Should I have a savings account or bank account, which is best?

It is common practice to have both a savings account and a bank or transactional account, which are generally linked. A bank account, or everyday transaction account has features like paying bills via BPAY and a linked debit card. A savings account doesn't generally have any of these features, but it does pay interest on any funds you have deposited in your account, subject to the terms of the account.