The Four Numbers on a Savings Account Fact Sheet
Most Australian savings account fact sheets display interest rate information in a structure that follows roughly this pattern — though the exact labels vary by bank:
Base rate (also called standard rate or revert rate): The rate you earn without doing anything, or when you do not meet the bonus conditions. This is often the lowest number on the fact sheet and can be very low — sometimes near zero — on accounts that are primarily marketed through their bonus rate.
Bonus rate: An additional percentage that applies on top of the base rate when you satisfy a set of monthly conditions. The bonus rate is not the total rate you earn; it is the additional component. Some fact sheets make this explicit; others present only the combined total, which can be confusing.
Maximum rate (also called total rate or advertised rate): The sum of the base rate and the bonus rate. This is typically the large, prominently displayed number on the account's marketing materials and fact sheet. It is the rate you earn when all conditions are met.
Introductory rate (if applicable): A higher rate that applies for a fixed period — typically three to five months from account opening. After this period expires, the rate reverts to either the base rate or the maximum conditional rate. Not all accounts have an introductory rate.
How Interest Is Calculated and Credited
For most Australian savings accounts, interest is calculated on the closing daily balance and credited to the account once per month, usually on the last business day. This is worth understanding because the rate on the fact sheet is an annual rate (per annum, or p.a.) — it is not the monthly rate, and it is not applied once at the end of the year.
To calculate the approximate interest for a month: take the balance, multiply by the annual rate (expressed as a decimal), and divide by 365, then multiply by the number of days in the month. For example: a $5,000 balance, 5% per annum rate, 30 days — gives approximately $20.55 in interest for that month.
This daily calculation also means that if your balance changes during the month — through deposits or withdrawals — the interest is calculated on each day's closing balance, not a single snapshot. Depositing early in the month and withdrawing late maximises the interest calculation for that month; withdrawing early in the month and depositing late minimises it.
What the Conditions Mean for Your Effective Rate
The practical question for any conditional savings account is: what rate will I realistically earn over the course of a year, given how I intend to use the account? This is your effective rate.
If you will meet the conditions eleven out of twelve months, your effective rate is approximately 11/12 of the maximum rate plus 1/12 of the base rate. If the maximum rate is 5% and the base rate is 0.1%, and you miss conditions one month per year, your effective annual rate is roughly 4.59%. This is a reasonable outcome; the point of calculating it is to know what to expect rather than being surprised when your annual statement shows less than the advertised 5%.
Accounts where the base rate is extremely low (near zero) are more sensitive to missed conditions than accounts where the base rate is still reasonable. Knowing the base rate matters as much as knowing the maximum rate.
How Banks Can Change Rates
Interest rates on savings accounts are variable — they are not fixed contracts. Banks can and do change rates, typically in response to changes in the Reserve Bank of Australia's official cash rate or in response to competitive pressures in the savings market.
Banks are generally required to notify existing customers of rate changes, usually through email, app notification, or statement message. These notifications are easy to overlook. It is worth checking the current rate on your account's fact sheet every few months to confirm it matches what you signed up for and what you expected.
If the rate has decreased significantly, it is a natural trigger for the comparison exercise described in Dispatch 01 — reviewing whether your current account still represents the best available option for your needs.
What this dispatch does not do
- Quote current interest rates at any bank
- Recommend specific savings products
- Project future earnings or guaranteed returns
- Provide personalised financial advice
