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Cash and savingsrisk 1 of 5: cash-like, your money stays put

Savings account

Rules, protection and tax below are for Australia.

What it is

The plainest place to keep money you might need soon. The bank pays you interest for holding it and you can take it out whenever you like, usually the same day, with no notice and no penalty.

The rate is variable. The bank can change it at any time and usually does when the central bank moves its rate, so what you earn this year says little about next year. That flexibility is exactly why the rate is lower than on money you agree to lock away.

For most people this is the first account on the list, not because it grows money but because it keeps an emergency fund within reach while earning a little.

How it works

  1. You open the account, pay in whatever you like, and the balance earns interest daily or monthly.
  2. The rate can change without your say-so; providers must tell you, but the notice can be short.
  3. Some accounts pay a temporary bonus rate for the first year; the drop afterwards is where people lose out.

The honest pros and cons

For

  • Instant access; this is where an emergency fund belongs.
  • Protected by a deposit guarantee scheme in most countries, up to a limit.
  • No fees, no prices, nothing to sell.

Against

  • The rate follows the market down as well as up.
  • Almost always below inflation over long stretches, so the money slowly buys less.
  • Easy to leave in a poor-paying account for years; loyalty is not rewarded.

Getting it in Australia

Online savings account available

Most accounts advertise a bonus rate that depends on conditions such as a monthly deposit or no withdrawals; miss the condition and the base rate is far lower. Interest is taxed at your marginal rate.

  • Your protection: the Financial Claims Scheme covers up to 250,000 dollars per account holder per authorised bank, building society or credit union (source, checked 2026-09-11)
  • Tax here: interest is added to your taxable income; there is no tax-free savings wrapper outside superannuation (source, checked 2026-09-11)

How to start

  1. Read the bonus conditions before the rate; an account you cannot meet the conditions on pays its base rate.
  2. Compare rates on Moneysmart or a comparison site, then open online with identity documents.
  3. Keep any one institution under 250,000 dollars if you hold large cash sums.

Wherever you are

  1. Decide how much you need within reach; three to six months of spending is the usual guide.
  2. Compare easy-access rates and check the deposit guarantee covers the provider.
  3. Open online, pay in, and set a reminder to recheck the rate every few months.

Try it

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Go deeper

Also called

easy-access account, instant-access account, deposit account, high-yield savings account

Often confused with

  • Term deposit: Money locked at a bank for a fixed period in exchange for a known interest rate.
Savings account in Australia · wealth-coop