Savings accounts: bonus rates vs base rates explained

Base rate, bonus rate, introductory rate

Moneysmart's savings accounts page (updated 9 October 2026) describes the parts:

• Standard (base) rate. The interest the account pays without extras. Moneysmart says the higher the rate, the faster your savings grow.
• Bonus rate. Extra interest when you meet certain requirements. Moneysmart's examples are regular monthly deposits, such as $500 a month, or keeping a minimum balance. Check the conditions before you open an account.
• Introductory rate. A higher rate for a limited time, often for new customers. Moneysmart's advice: always check what the interest rate will be after the introductory period ends.

Moneysmart says a competitive savings account could offer 5% or more and that transaction accounts usually pay between 0% and 1%. Those are the page's words at the date checked, not a current RateSonar figure.

What a bonus usually needs

Terms differ by lender, so read the product terms. Moneysmart lists these points to compare, which cover the usual conditions:

• how often you can withdraw, and whether you must make regular deposits;
• any minimum balance you must keep and any maximum you can save;
• whether you need a linked transaction account with the same provider;
• whether there is a monthly account fee;
• how often interest is paid and what the payment conditions are.

Some accounts add a condition that the balance grows each month. Others do not. Ask the lender exactly what counts as a deposit, when the month ends and what happens if you miss a month.

A worked example

These are round numbers made up for illustration. They are not a real account or a current market rate.

Say a hypothetical account has a 2.00% base rate and a 2.00% bonus that is paid only in a month when you make a deposit and make no withdrawals. Your balance stays at $20,000 for the year (RateSonar's arithmetic, ignoring compounding and daily balance changes).

Missing one month costs about $33 here, because the bonus is paid for 11 months out of 12. In the real world, interest is generally calculated on the daily balance, and the account's terms say how and when it is paid.

If an introductory rate applies, repeat the sum with a rate for the introductory months and the base rate after. For example, a hypothetical 4.00% for 4 months and 2.00% for the other 8 months on $20,000 is $20,000 times (4.00% times 4/12 plus 2.00% times 8/12), which is about $533 for the year, against $800 if the 4.00% lasted the whole year.

Tax and protection

• Tax. Interest is generally income you declare in your tax return. The ATO's pages on investment income and gross interest cover this. Those pages did not load when we checked, so confirm the current rules at ato.gov.au or with a registered tax professional. This is general information, not tax advice.
• Financial Claims Scheme. Moneysmart says savings accounts are protected by the Australian Government's Financial Claims Scheme, which guarantees to pay up to $250,000 per person, per institution, if your institution fails (Moneysmart, updated 9 October 2026). APRA says the scheme protects deposit-holders with Australian banks, building societies and credit unions. Check the cap on the official pages, because it is a policy amount.

Savings or paying down a loan

If you have a home loan, think about what each dollar does. Interest on savings is taxable income, while money in an offset account reduces the interest charged on your loan. Whether savings or the loan comes first depends on rates, tax and your goals. See extra repayments vs an offset and the home loan rate board to see what loan rates are advertised. For fixed-term options, see term deposits.

Mistakes to avoid

• Chasing the headline rate without checking the conditions.
• Forgetting an introductory rate ends, and leaving money in the account at the lower rate.
• Missing a month's condition by a day, such as a deposit that arrives late.
• Ignoring fees, or a required linked account.
• Putting more than the cap in one institution without thinking about it.