What is a bonus rate on a savings account?
Bonus rate of interest – What is it?
Many high interest online savings accounts feature a ‘bonus rate’ of interest. A savings account bonus rate is an additional rate of interest above the base rate. Savers can often get the bonus rate by meeting certain conditions, like:
– Making a minimum monthly deposit
– Making no withdrawals, or very few withdrawals in a month
– Setting up an Automatic Savings Plan with a regular direct debit from a linked transaction account
– Depositing your salary in a linked transaction account
– Having a linked transaction account with the same bank or credit union
– Sometimes the bonus rate expires after an introductory period – typically three to four months.
Beware of the base rate
So, what’s the base rate all about then? The base rate of a savings account is the amount of interest that will be paid in months when you don’t meet the conditions of the bonus rate. Maybe you missed making a deposit, or made some withdrawals from your savings account. Then you would get the base rate of interest only.
There is a wide range of base rates – from practically zero to generous. If you think you won’t meet the conditions of the bonus rate every single month, you might want to inspect the base rates carefully.
Check out savings accounts from all major Australian banks and credit unions here.