Which banks offer 5% savings accounts?

As it stands there are very few banks offering ongoing unconditional 5% p.a. rates, with Australian Unity Bank the only one in InfoChoice's database.

Instead, savers have to jump through a few hoops to get the bonus rate, including tough ones like being under a certain age. If they fail to meet the bonus criteria, such as minimum deposits, the base rate usually applies, which is often close to 0.

Below is a breakdown of some banks offering savings accounts of 5% p.a. or more - by InfoChoice's tally there are more than 30, including ones that share a banking licence such as BankSA and Bank of Melbourne (Westpac).

Compare savings accounts of 5% or greater

What to watch out for

As briefly mentioned before, there's no such thing as a free lunch. Very few accounts just offer 5% p.a. in exchange for parking your money and doing nothing; there are often hoops to jump through.

Introductory periods

Some of the leading rates are only on offer for a few months - usually 3 or 4. After that a lower rate applies. 

While the rates can look good, you can see the total interest earned through the year in our comparison table above - it is likely significantly lower than an ongoing rate.

Further, many of these accounts are open to new customers only, meaning you can't have had a savings account with the bank in the past 12 months, for example.

Use requirements

There are a few use requirements, which tend to result in having to use a linked transaction account.

• Deposits: Many banks require a minimum deposit per month, which can be anywhere from $50 to $2,000.
• Withdrawals: Some limit the number of withdrawals on the savings account, sometimes to 0.
• Card transactions: Some banks have transaction requirements e.g. five settled card transactions per month on the transaction account.
• Grow balance: Some banks require you to grow your balance - it's not enough to simply deposit some money then withdraw it. If you had $1,000 in there at the start of the month, by the end you would need $1000.01 - some banks might go one further and require say $50 minimum balance growth.

The intended play is basically to get you to move your everyday banking to that institution; they don't want to give you a good rate of return only to skive off and chase rates every few months.

Age limits

This one is a little harder to control. Some of the leading interest rates are only offered to people under a certain age, for example under 30 or 35. If you're older than this a lower rate might apply.

Maximum balances

Many leading interest rates apply to a maximum balance, for example $50,000 or $100,000. After that a lower rate might apply.

You will also have to double check that if you breach this barrier, the lower rate doesn't apply to the WHOLE balance - some banks do this.

Base rates if criteria isn't met

Failure to meet the bonus criteria usually results in a base rate applying. This is often very low, sometimes 0.10% p.a. or less. This means you might sacrifice a lot of interest. But rest assured, you can pick up the slack again next month and earn interest.

Shared banking licences and the deposit guarantee

The Federal Government guarantees up to $250,000 per account holder, per bank, through what's called the Financial Claims Scheme. In the unlikely event your bank was to go belly up, you'd have the right to claim up to $250,000 and get your money bank... eventually.

However this applies per banking licence (ADI) - it's important to note various banks share licences. Popular shared licences include:

• NAB and ubank
• Westpac, Bank of Melbourne, BankSA, St George, and RAMS
• CommBank and Bankwest
• Bendigo Bank and Up
• Teachers Mutual Bank, Firefighters Mutual Bank, UniBank, Health Professionals Bank, Hiver
• Heritage Bank and People's Choice
• Newcastle Permanent and Greater Bank

This means that if you had say $500,000 at Westpac and BankSA, you'd only be covered up to $250,000. If you were concerned about your money being guaranteed, it could be wise to spread it around various institutions.

Tax

Savings interest earned is considered taxable income. With interest rates higher, don't be surprised to see a lower tax return or even a tax bill at the end of the financial year due to this. 

It's taxed as part of your regular income, meaning if you earned $70,000 from your job and $2,000 in interest, you'd be taxed as if you earned $72,000.

See Also: Income tax calculator

Popular banks' requirements

ING Savings Maximiser

• Deposit $1,000/month into linked Everyday account; grow balance; 5 settled card transactions on Everyday account; maximum balance $100,000.

Macquarie Bank intro account

• Four month fixed intro rate for new customers; maximum balance $250,000.

Bank of Queensland Future Saver & Smart Saver

• Future Saver: Ages 14-35; deposit $1,000/month into linked transaction account; 5 settled card transactions on everyday account; maximum balance $50,000.
• Smart Saver: Ages 36+; same criteria applies except maximum balance $250,000.

ubank Save 

• Deposit $200/month; maximum balance $250,000.

ME Bank HomeME

• Exclusive to the new 'MeGO' app; deposit $2,000/month into linked transaction account; grow balance every month; maximum balance $100,000.

Westpac Life

• Over-30s: Grow the balance every month. A $5 monthly fee applies unless unless you deposit $2,000 a month; are a tertiary student or under 30; hold a pension or healthcare concession card; or you're new to Australia.
• Get a 20 basis point premium if you're aged 18-29; maximum balance of $30,000; grow savings every month; make 5 card transactions per month on the linked transaction account.

CommBank NetBank Saver

• 5-month introductory bonus rate.

NAB Reward Saver

• Make one deposit and no withdrawals in a month.

List of banks with 5% savings accounts

Below is a list of banks that offer - or have previously offered - 5% savings accounts in the most recent RBA tightening cycle.

1. Commonwealth Bank
2. NAB
3. Westpac
4. AMP
5. Australian Mutual Bank
6. Australian Unity Bank
7. Auswide Bank
8. Bank of Melbourne
9. Bank of Queensland
10. BankSA
11. BCU
12. Bendigo Bank
13. Credit Union SA
14. Easy Street
15. Great Southern Bank
16. HSBC
17. IMB Bank
18. ING
19. Macquarie Bank
20. ME Bank
21. Move Bank
22. MyState Bank
23. Newcastle Permanent
24. People's Choice
25. Police Bank
26. P&N Bank
27. Rabobank
28. RACQ Bank
29. Southern Cross Credit Union
30. St George Bank
31. Teachers Mutual Bank (and subsidiaries)
32. ubank
33. Unity Bank
34. Virgin Money

This list may not be exhaustive.

Read more: Savings Accounts Basics Savings Account News

Harrison Astbury

Editor and Financial Analyst

Harrison is InfoChoice's editor and market commentator. With years of experience at some of Australia's largest comparison sites and media organisations, Harrison is passionate about all things banking.

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