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If your circumstances or saving and spending habits mean meeting the account’s conditions will be difficult, it may be best to look for an account that offers a high ‘base’ rate of interest that you will earn regardless of how you use the account.Īlso bear in mind the amount of savings you have and whether stepped interest rates apply to the accounts you are considering, because that could mean you only earn the top rate of interest on a portion of your savings. In these instances, you may earn less interest if you withdraw money because you need it to pay a bill, don’t make a large deposit in the month, or the account balance is simply the same at the end of the month as it was at the start.Īnother common condition that needs to be met to earn the top rate of interest on certain savings accounts is the customer needing to have a linked transaction account with the same bank and to make a certain number of card purchases via that account each month. A good rate on a savings account is generally one that’s competitive relative to the other products in the market currently, but is also offered on a product that meets your needs.įor example, some savings accounts offer a higher interest rate if certain conditions are met, such as if no withdrawals are made in the month, a minimum amount is deposited into the account each month and/or the account balance grows in the month. The savings rates offered by banks can fluctuate, often in line with the Reserve Bank of Australia’s official cash rate, and also vary from provider to provider. What is a good savings account interest rate? With a higher interest rate of 2.5% p.a., your monthly savings amount would need to be $1,232 each month (around $568 fortnightly).
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You would need to save an additional $1,263 each month (or around $583 each fortnight) to reach this goal, assuming your savings will earn a rate of 2% annually. Say your aim is to have a $100,000 home deposit saved to buy a house three years from now, and you currently have $50,000 in savings. The amount you’ll need to put into a savings account each month will depend on your goal, how much you have in savings to start off with and what interest rate you are earning. Where this is the case, the bank would calculate interest earned on your savings account at the rate that applies to the relevant portion of the balance and add the interest earned amounts together to give the total interest earned each month.Ĭompare Savings Accounts How much do I need to save each month? on the first $10,000 and 1.5% on amounts above that. Some savings accounts offer stepped interest rates, meaning the bank pays different interest rates depending on how much money is in the account – for example, 1% p.a. including the interest earned in the previous month, assuming you leave it there). In the next month, interest will be calculated on the new higher balance (i.e.
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The daily interest earned amounts for the month are added together and that amount is deposited into the savings account each month. This means the bank takes the closing balance of your savings account each day, multiplies it by the annual savings rate, then divides that number by 365 to arrive at the daily amount of interest earned. Interest on savings accounts is typically calculated daily and paid monthly. You can tweak the regular savings amount to see what the impact will be if you put away a bit extra with each paycheck and, of course, what difference a higher interest rate could make. A savings calculator helps you work out how much money you will have in savings by a specified endpoint, based on how much you have to deposit into a savings account initially, how much you plan to add to it on a regular basis and what interest rate the account offers.Ī savings interest calculator can be useful if you are working towards a goal, such as saving for a home deposit, planning a wedding or saving up to buy a car.