Savings accounts are having a moment.
After spending years earning very little on cash, Australians can once again find high interest accounts offering savings rates around 5% p.a. or more.
That can make cash look surprisingly competitive with investing.
But there’s an important difference in the way we tend to compare them.
When assessing an investment, we usually look beyond its return this year. We look at five years, 10 years or longer.
With savings accounts, it’s easy to do the opposite: take the rate being advertised today and mentally treat it as though that’s what cash will continue earning.
History suggests that’s a dangerous assumption.
The better comparison isn’t today’s savings rate against a long-term investment return. It’s long-term cash against long-term investing.
And when you zoom out, today’s high savings rates start to look much less permanent.
What is the average savings account interest rate in Australia?
In May 2026, the average Australian bonus savings account rate was around 4.8% p.a., according to RBA data compiled by Finder.
That’s attractive.
But it is also well above what savers have experienced across much longer periods.
Using the annual average bonus savings rates in the same RBA-sourced dataset:
| Period | Average bonus savings rate* |
| Current rate (May 2026) | ~4.8% |
| 2021–2025 average | ~3.1% p.a. |
| 2016–2025 average | ~2.5% p.a. |
| 2002–2025 average | ~3.2% p.a. |
That’s quite a different picture from looking at the best savings account available today.
The point isn’t that today’s rate is bad. It’s that today’s rate is today’s rate. It’s not a reasonable assumption for what cash will necessarily earn over the next five, 10 or 20 years.
Current high interest savings accounts include:
| Bank | product | Base interest rate p.a. | Maximum variable interest rate p.a. | Additional notes |
| Robobank | High Interest Savings Account | 4.00% | 5.90% | Variable rate is a 4 month introductory rate. Variable rate is available on balances up to $250,000. |
| Bankwest | Easy saver | 5.00% | 5.75% | Variable rate is a 4 month introductory rate. Interest rate for deposit amounts $0 – $250,000 – a lower rate is available for balances above this. |
| ING | Savings maximiser | 0.01% | 5.50% | Variable rate is available for account values up to $100,000. To qualify for the benefit users must deposit $1,000 from their ING account to their savings account, make 5 or more settled card purchase and grow their nominated savings balance. |
| Macquarie | savings account | 5.00% | 5.35% | Variable rate is a 4 month introductory offer on balances up to $250,000. |
| AMP Bank GO | 5.25% | 5.25% | Interest rate is available for balances up to $50,000. Interest rate reduces as balances grow beyond this down to 0.00% for balances over $5m. |
Australian savings account rates have changed dramatically
The history of savings rates makes this even clearer.
The average bonus savings rate was around:
- 5.11% in 2011
- 2.88% in 2015
- 1.89% in 2019
- 0.35% in 2021
- 4.87% in 2024.
The rate didn’t stay high indefinitely, and it didn’t stay near zero indefinitely either.
Savings rates move through interest-rate cycles.
Annual averages shown; individual savings-account rates and eligibility conditions vary.
The Reserve Bank explains why this happens.
Bank deposit rates are influenced by the cash rate and banks’ funding costs. When monetary policy changes, savings rates tend to move too, although banks don’t necessarily pass through every cash-rate movement equally.
That’s why a saver who assumes today’s rate will persist indefinitely is effectively making an interest-rate forecast.
We should measure cash over the long term too
Investors are regularly reminded not to judge shares based on what happened over one year.
The same principle should apply to cash.
Vanguard’s 2026 Index Chart shows the return from an Australian cash benchmark over several different timeframes to 30 June 2026.
This is the central lesson.
Someone looking at a savings account offering close to 5% today might reasonably think cash can generate returns in that range over the long term.
History suggests otherwise.
The comparison investors can get wrong
Imagine you’re considering whether to move money out of a long-term investment portfolio because your bank is offering a savings rate around 5%.
You might compare:
- Savings account: around 5% today
vs
- Investment portfolio: its expected or historical long-term return.
But those numbers measure completely different things.
One is a rate available now.
The other represents an outcome measured over many years and through multiple market cycles.
The fairer comparison is: long-term cash return versus long-term investment return.
For context, over the 30 years to 30 June 2026, Vanguard’s Australian cash benchmark returned 4.0% p.a., while Australian shares returned 9.0% p.a. Australian shares also experienced considerably greater volatility and periods of negative returns, so the two assets serve very different purposes. Past performance isn’t a reliable indicator of future performance.
Inflation matters too
The number credited to your savings account isn’t necessarily the same as the increase in your purchasing power.
Australia’s annual headline inflation rate was 3.5% in July 2026.
If a savings account were earning 4.8% while prices were rising by 3.5%, its approximate real return would only be around 1.3% before tax.
There is another consideration too.
Interest earned from an Australian bank or financial institution generally forms part of an Australian resident’s assessable income.
So depending on your tax circumstances, the amount by which your savings actually increase your purchasing power can be lower again.
That doesn’t make a savings account a poor product.
It simply means a headline interest rate isn’t the same thing as long-term wealth growth.
High savings rates don’t necessarily mean you should change a long-term investment plan
This is where the distinction matters most for investors.
Moving a long-term portfolio into cash because savings rates suddenly look attractive isn’t simply choosing a higher interest rate.
It’s making a decision about the future direction of interest rates and investment markets.
And you then need to make another decision later: when do you invest again?
If savings rates eventually fall, markets may already have moved.
Waiting until investing feels obviously attractive again can mean waiting until after prices have risen.
This is why reacting to short-term rates can quietly turn a long-term investment strategy into a market-timing strategy.
At Stockspot, we prefer to build portfolios around goals, risk and investment timeframe rather than trying to predict which asset will perform best next.
A diversified portfolio also doesn’t require you to choose between being completely invested in shares or completely in cash. Different assets can play different roles depending on the strategy and investor.
Stockspot clients can also use Stockspot Savings for shorter-term money alongside their long-term investment portfolio.
Does this mean you shouldn’t have money in savings?
No.
Cash has an important role.
It can be appropriate for emergency savings, upcoming expenses and money you expect to need over shorter periods, where protecting the dollar value of your money may be more important than maximising its long-term growth potential.
The point of this analysis is narrower: don’t use a short-term savings rate to make a long-term investment decision.
Today’s savings rate won’t necessarily be tomorrow’s
There’s nothing wrong with earning 5% on cash while that rate is available.
The mistake is assuming 5% is what cash will continue earning indefinitely.
Australia has experienced savings rates above 5%, below 1%, and almost everywhere in between over the past 25 years.
That’s why investors should apply the same discipline to cash that they apply to every other investment: zoom out.
For money you need soon, the stability of cash can be valuable.
For money intended to compound over many years, focusing too heavily on today’s savings rate can distract from the reason you invested in the first place.
Your financial goals may last decades. Today’s interest rate won’t.
Frequently asked questions
What is the average savings account interest rate in Australia?
Using annual average Australian bonus savings rates sourced from RBA data, the simple average from 2002 to 2025 was around 3.2% p.a. Over the 10 calendar years from 2016 to 2025 it was closer to 2.5% p.a. Individual savings accounts can offer rates considerably above or below these averages and bonus conditions may apply.
Are savings account rates high in Australia in 2026?
Yes. The average bonus savings rate reached around 4.8% p.a. in May 2026, which is high compared with much of the previous decade. However, savings rates have varied considerably over time as monetary policy and competition between banks have changed.
Why do savings account interest rates change?
Savings account rates are influenced by factors including the RBA cash rate, banks’ funding costs and competition for deposits. As these change, banks can increase or reduce the rates offered to savers.
Can I assume a 5% savings rate for the next 10 years?
There is no guarantee today’s rate will continue. Australian bonus savings rates have moved from above 5% in some periods to below 1% in others. Long-term financial projections should therefore be cautious about assuming today’s advertised rate will persist indefinitely.
What has cash returned over the long term in Australia?
The Bloomberg AusBond Bank Bill Index returned 2.2% p.a. over 10 years, 3.3% p.a. over 20 years and 4.0% p.a. over 30 years to 30 June 2026. This is a cash-market index rather than a savings account and doesn’t represent the return from any individual bank account.
Should I move my long-term investments into cash when savings rates rise?
Higher savings rates can make cash more attractive for short-term goals, but moving long-term investments based only on today’s interest rate can involve market timing. The appropriate mix depends on your objectives, timeframe, risk tolerance and personal circumstances.
Does inflation reduce the return from a savings account?
Yes. Inflation reduces purchasing power. For example, a 4.8% nominal savings rate alongside 3.5% inflation equates to an approximate real return of around 1.3% before tax. Bank interest may also form part of your assessable income, depending on your circumstances.
Disclaimer: This information is general information only and doesn’t take into account your personal objectives, financial situation or needs. Past performance isn’t a reliable indicator of future performance. The content of this blog is not intended to represent or be a substitute for specific taxation or legal advice and should not be relied on as such. Any taxation, legal and other matters referred to on this blog are based on Stockspot’s interpretation of existing laws and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
