Compare Bonus Savings Accounts

How do bonus savings accounts work?

Bonus savings accounts are designed to reward committed savers. These accounts offer a base interest rate similar to a standard savings account. But here’s the twist — they offer an additional bonus interest rate on top of that base rate if you meet specific criteria, usually depositing a minimum amount each month.

Here’s an example:

Base interest rate: 1% pa
Bonus interest rate: 3.5 % pa
Potential combined interest rate (if you meet the criteria): 4.5% pa

Based on the above example, say you have $5,000 in your bonus savings account.
Without fulfilling any conditions, you’ll earn a base interest rate of 1%. So, for the month, your interest would be about $4.17.

However, if you meet the account conditions — for instance, depositing an additional $200 and making no withdrawals for a month — you’ll earn the combined interest rate of 4.5%. In that case, your interest for the month increases to around $19.50.

That’s almost four times more interest — the potential power of a bonus savings account.

What are the conditions for bonus interest?

The conditions vary across financial institutions. However, they often include conditions such as:

• Account growth of a specified amount each month.
• No withdrawals.
• Deposit a minimum amount of money.

What are the benefits of a bonus savings account?

Higher interest rates: When you meet the specified conditions, the bonus interest rate is usually higher than the rate offered on regular savings accounts.
Encourages saving: The bonus interest conditions encourage you to make regular deposits and limited withdrawals, which can help build your savings habit.
Goal-oriented: If you’ve got a specific goal, like building an emergency fund or saving for a big purchase, a bonus savings account can be a helpful tool to keep you on track.
Compound interest: The higher the interest rate, the faster your money grows, especially when interest compounds.

What happens if I don’t meet the criteria?

Whether you meet the bonus conditions or not, you’ll still earn your ‘base rate’ of interest, which is applied to your savings. It’s usually lower than the bonus interest rate, but it means your savings will still grow even if you don’t meet the bonus criteria.

However, remember that the real draw of a bonus savings account is the potential for that higher bonus interest rate. If you’re not consistently meeting the criteria, another type of savings account might be better suited to your financial needs.

Can I make a withdrawal?

We all know life can be unpredictable. There may be times when you need to dip into your savings. Does this mean you’ll miss out on the bonus interest?
It depends on the account you select. With many accounts, you’ll forfeit your bonus interest for that month if you need to withdraw money. Other accounts may allow you to make a withdrawal and still earn bonus interest if other criteria have been satisfied.

It’s important to choose an account that offers the right level of flexibility for you.

Bonus savings account vs regular savings account

What to look for in a bonus interest savings account

Choosing the right bonus savings account involves a careful review of a few key points:

The base and bonus interest rates: These are the central features of a bonus savings account; consider both the base and bonus rates.

In some cases, a regular savings account might offer a higher interest rate than the base rate of the bonus savings account. If you’re unsure about consistently meeting the requirements for the bonus — meaning you’ll only earn interest at the base rate — consider the regular savings account instead.

Monthly deposit requirements to earn bonus interest: Each bank will have different requirements about how much needs to be deposited each month to earn the bonus interest. Make sure to choose an account where the deposit requirement aligns with your usual saving habits.

Withdrawal conditions and penalties: Some accounts don’t allow withdrawals or penalise you by withholding the bonus interest if you make withdrawals. Consider your cash flow; how likely are you to need to access the savings in the short term?

Fees and charges: Check maintenance fees, transaction fees, or penalties for not meeting the criteria. These charges could potentially offset the benefits of the bonus interest.

For disciplined savers aiming to maximise earnings, a bonus savings account can be highly beneficial. However, a regular savings account may be better if you value flexibility and steady interest, regardless of savings habits.