High interest savings: What are your options?

piggy bank table

Let's say you're trying to save for a car, but don't want to shoulder the risk of investing in an unfamiliar asset. You'd like the relative safety of putting your money into a savings account, but you also want what you save to grow faster than it would if you took that option.

There are a variety of high interest savings accounts at your disposal that could work for your savings strategy. Here's a quick overview of the options at hand.

Term deposits

The term deposit is the classic high interest savings option. You put a lump sum away for a set period of time and at a particular interest rate, insulating you from interest changes. While it's in there, you won't be able to access your funds, except under certain conditions - for instance, you could get an early withdrawal, but be penalised for it. With some term deposits, the sum only matures once the period has run its course

Reward saver/bonus interest accounts

As the name hints at, this type of account rewards good saving habits with a bonus rate of interest. The conditions under which you will receive your bonus rate depend on the individual account. Sometimes it's when you make a deposit of a particular size, while other times it's if you avoid making withdrawals - it could even be both!

High interest online savings accounts

Online savings accounts are designed for those who want to save every little cent they can. These accounts grant you minimal interaction with the bank, are managed online and can save you money on fees. Some may even come with an introductory period of bonus interest. If you're playing around with a Lifestyle Budgeting tool trying to save as much as possible, these could give you a little more room to play with.

Remember that there are other low-risk savings alternatives to these accounts. For instance, if rates are low and you have a home loan, you could benefit more by putting money into a mortgage offset account and bringing down the amount of interest you pay, giving you more cash in hand at the end of the day.