12 Best Ways to Earn Interest on Money in Australia (2025)

Earning interest on your money is key to long term financial security. Smart Australians are moving beyond basic savings to get more out of their money.

The good news is there are many proven ways to get returns on your savings, from traditional accounts to innovative investment solutions.This guide shows you how to get the most out of your money using 12 different methods.

Each method is suited to different financial goals and risk tolerance. Whether you’re building an emergency fund or looking for higher returns, these will help you grow your wealth faster.

1. High Interest Savings Accounts for Daily Growth

High interest savings accounts offer competitive rates with daily compounding and flexible access. Major Australian banks and online providers offer various account options with different conditions and features.

Current High Interest Savings Account Rates

Get competitive yields with these top providers offering the best savings account:

• ING: Up to 5.50% per annum on savings account balances with bonus rate conditions
• Ubank: 5.30% per annum interest rate with monthly bonus interest requirements
• Macquarie Bank: 5.25% ongoing interest rate per annum for account holder benefits
• Bendigo Bank: Competitive rates with low account fees
• Great Southern Bank: Strong interest rate options for credit union members
• Rate changes: Rates change frequently based on market conditions

When you compare savings accounts, look for bonus interest rate offers and minimal account fees. Many savings accounts require a linked transaction account or linked everyday account for optimal bonus rate benefits. Most savings accounts also need regular deposits to maintain higher interest earning potential.

Benefits of Daily Interest and Compound Interest

Daily compound interest accelerates your earnings through reinvestment of accrued amounts. Instant access to funds without penalties makes this ideal for emergency savings account needs and flexible financial planning.

Most high interest savings products require a linked account for everyday transaction accounts. This linked transaction account setup helps banks and credit union providers offer higher interest rates while managing operational costs. The interest calculated daily provides more interest growth over time.

Eligibility Criteria and Account Requirements

To open the right savings account, you’ll need to meet basic eligibility criteria including providing your tax file number and initial deposit requirements. Many saver account products require:

• Minimum balance: Varies from $0 to $1,000 depending on the savings account provider
• Regular deposits: Monthly contributions to maintain bonus interest conditions
• Linked everyday account: Connection to everyday transaction accounts for deposits and withdrawals
• Direct deposit: Set up for salary or pension payments to qualify for bonus rate
• Account monthly: Some providers require account monthly activity to avoid monthly maintenance fees

To explore comprehensive guidance on choosing the best savings account strategy, comparing interest rates across major Australian banks, and understanding bonus rate conditions to maximize your returns, check out this detailed high-interest savings account comparison guide.

2. Term Deposits – Fixed Interest Returns You Can Count On

Term deposits offer fixed interest rate returns for a set period with government-backed security. Banks and credit union providers offer various term options with fixed interest rates and government guarantee protection up to $250,000.

Current Term Deposit Interest Rates

Get guaranteed yields with these current market interest rate options:

• Best rates: Up to 4.60% per annum available on four-month terms from select credit union providers
• Judo Bank: Competitive interest rate options across multiple terms with minimum balance requirements
• ING: Solid returns for established account holder customers with same provider benefits
• Rate variation: Significant interest rate differences between institutions when you compare savings accounts

Start with minimum deposits of $1,000 at most banks and credit union institutions. Choose your set period from 3 months to 5 years. Example: $50,000 at 4.60% per annum for 6 months generates $1,150 guaranteed return with interest paid at maturity.

Guaranteed Return Benefits

Fixed interest rates protect against falling market conditions. Term deposits are considered low risk investments compared to alternatives. The government guarantee covers deposits, providing security for conservative savers.

No monthly account fees or bonus interest conditions apply. Simple interest calculated makes planning easy. Perfect for known future expenses and meeting specific savings goals.

For detailed information about how term deposits work, interest calculation methods, and tips for choosing the best option for your situation, visit MoneySmart’s expert advice on term deposits which covers everything from comparing rates to understanding early withdrawal penalties.

3. Government Bonds for Guaranteed Income

Australian bonds provide reliable interest income with the highest credit rating. Semi-annual interest distributions offer predictable returns with zero default risk from sovereign backing.

Australian Bond Yields

Australian 10-year bonds currently yield 4.33% per annum with semi-annual interest distributions. Two-year bonds offer around 4.1% per annum with Treasury bonds providing fixed income over the security’s full term.

Benefits of Risk-Free Payments

Access secure income through bond interest benefits:

• AAA credit rating: Safest way to earn interest through low risk investments in Australia
• Zero default risk: Guaranteed interest payments on scheduled dates
• Guaranteed payments: Income arrives reliably for long-term savings goals
• Market liquidity: Sell bonds before maturity while maintaining returns

To learn more about how government bonds work and their role in building a balanced investment strategy, explore the comprehensive guide to Australian government bonds on ASX which covers everything from bond types to investment processes.

4. Corporate Bonds for Higher Interest Rates

Corporate bonds from established companies offer enhanced interest compared to securities. Investment grade bonds provide regular interest payments from quality Australian and international issuers, delivering higher interest than traditional savings account options.

Corporate Bond Interest Rate Analysis

Access higher interest through corporate bond investments:

• Yield range: 5-7% per annum interest rate from investment grade Australian bank bonds
• Credit ratings: AAA bonds offer lower interest rates, BBB bonds provide higher interest yields
• Risk premium: Corporate bonds help you access more interest than traditional low risk investments

Benefits of Higher Corporate Returns

Access superior returns through corporate bond benefits:

• Higher interest: Consistently outperform traditional savings account products
• Regular interest disbursements: Steady income from quality corporate issuers
• Diversification: Multiple issuers help you maintain stable growth across sectors while achieving savings goals

For advanced strategies to optimize interest returns, understanding credit rating migration risks, and comprehensive guidance on timing corporate bond investments during different economic cycles, visit this detailed Betashares corporate bonds guide.

5. Enhanced Returns from Cash Management Trusts

Cash management trusts offer higher interest returns through professional money management. Daily liquidity combined with institutional investment access provides better yields for larger investments, typically requiring higher minimum balance requirements than standard savings accounts.

Cash Management Trust Returns

Professional cash management yields 0.5-1% above standard savings account interest rates through expert interest optimization. Daily liquidity access gives flexibility while institutional investment opportunities generate higher returns for larger balances above typical saver account initial deposit requirements.

Benefits of Professional Cash Management

Expert fund managers maximize daily returns through institutional money market access and optimization strategies. Monthly distributions provide regular income while professional oversight reduces individual management requirements. This can earn more interest than managing multiple savings accounts individually.

To understand how cash management trusts operate, their fee structures, and whether they align with your investment strategy, explore FundSquire’s detailed analysis of cash management trusts which breaks down the mechanics and benefits of these professional cash management solutions.

6. Notice Savings Accounts for Higher Interest Rates

Get higher interest rates through notice savings account features:

• Notice periods: 30, 60 or 90 days notice for higher interest rates from credit union and bank providers
• Heritage Bank: 90 day notice savings account with 5.8% per annum bonus rate
• Rate premium: Longer notice periods get you higher interest rates than standard savings accounts

How to Use Notice Accounts

Open like regular savings accounts online through internet banking. Choose your notice period carefully. Give required notice before withdrawing to maintain bonus interest conditions.

Use for large purchases and specific savings goals. Perfect for house deposits or car purchases where you can plan withdrawals. Higher interest rates compensate for reduced flexibility compared to everyday transaction accounts.

Advantages of Higher Notice Savings

Higher interest rates than instant access savings accounts. Still provides reasonable flexibility with planning. Same provider protection as standard bank accounts.

No market risk or volatility concerns. Interest rates can change over time. Ideal for conservative savers looking for better returns with low risk investment profiles.

For current rates, comparison tools, and strategies to make the most of notice savings accounts, check out Finder’s notice savers comparison and guide which helps you evaluate options and choose the best notice savings account for your financial situation.

7. Home Loan Offset Accounts: Tax-Free Interest Returns

Offset accounts give interest equivalent returns by reducing mortgage interest dollar-for-dollar. If your mortgage rate is 6.5% p.a., offset savings gives you equivalent interest return. Tax-free interest benefit as no actual amount received.

$50,000 in one account offset saves $3,250 per year. This is 6.5% p.a. tax-free interest return. More valuable than taxable interest income for many account holders.

How to Get Maximum Interest Equivalent Benefits 

Get maximum tax-free equivalent interest returns with these strategies:

• Max funds: Keep as much as you can in offset for more interest savings
• Salary deposits: Direct deposit into offset for immediate interest benefits
• Credit card usage: Use cards for purchases, pay with regular monthly deposits for more interest savings
• Multiple accounts: Use separate offsets for different savings goals while earning interest equivalents

Advanced strategies to get more interest benefits:

• Automatic transfers: Maintain optimal balances for consistent interest savings with direct debits
• Goal separation: Different accounts for various savings goals to maximise interest potential
• Payment timing: Strategic use to boost interest earning potential

Tax-Free Equivalent Interest Savings

No tax on offset interest benefits. Effective interest return is mortgage interest rate. Reduces loan term and total interest paid monthly through smart financial planning.

Instant access to funds when needed. Flexible interest savings with no term commitments. Perfect for mortgage account holder looking for tax-efficient interest alternatives while having easy access to funds.

To learn more about how offset accounts work, eligibility requirements, and whether they’re the right choice for your mortgage strategy, visit Macquarie’s detailed offset account explanation which covers the mechanics and benefits of this powerful financial tool.

8. Peer-to-Peer Lending for Direct Returns

P2P platforms connect investors directly with borrowers for potentially higher interest rates. Diversification across multiple loans helps manage default risk while accessing alternative investment opportunities that can earn interest beyond traditional savings account limits.

P2P Platform Interest Rates

Get higher returns through peer-to-peer lending:

• Return range: 6-12% per annum depending on borrower risk grades, much higher than most savings accounts
• MoneyPlace: Established platform for P2P income with competitive interest rates
• Plenti: Alternative operator for peer-to-peer returns with various minimum balance requirements
• Risk grades: Higher risk loans get you higher interest rates than low risk savings account products

Borrower Payments

Register with established P2P platforms online and complete investor suitability assessments for account approval. Start with small amounts across multiple loans and risk grades to understand platform mechanics and manage default risks effectively. This way you can earn interest more effectively than concentrating funds in a single account with traditional banks.

For insights into P2P lending strategies, platform evaluation criteria, and risk management approaches, explore US News Money’s guide to the best peer-to-peer lending websites for investors which provides comprehensive analysis of P2P investment opportunities and considerations.

9. Bond ETFs for Diversified Growth

Bond ETFs give you instant diversification across multiple interest-bearing bonds with professional management. Daily liquidity combined with lower costs than individual bond purchases provides efficient fixed income exposure that can earn interest more consistently than individual securities.

Interest-Bearing Bond ETF Yields

Get diversified bond income through ETFs:

• VanEck FLOT: Floating rate ETF for variable income with competitive interest rate exposure
• Professional management: Daily management to maximise returns across multiple securities
•  Frequency: Monthly or quarterly interest payments

Benefits of Diversified Returns

Instant diversification across multiple bonds with professional management and daily liquidity. Lower costs than individual bond purchases and transparent holdings make ETFs suitable for SMSF and larger savings goals.

For insights into Australia’s bond ETF market, performance comparisons, and guidance on selecting the right bond ETFs for your portfolio, read Stockspot’s analysis of Australian bond ETFs which breaks down the key options and strategic considerations for bond ETF investing.

10. Money Market Accounts for Higher Growth

Money market accounts invest in short-term securities with professional management. Higher interest than standard savings account options with high liquidity and principal stability.

Money Market Interest Rates

Money market accounts invest in short-term securities with interest rates above savings account rates. Banks and credit unions offer options with professional management optimising yields daily, higher minimum balance requirements than standard saver account products.

Advantages of Flexible Money Markets

Available through banks and fund managers with higher minimum balance requirements than standard savings account products. Application process similar to opening any savings account through internet banking with additional features like check-writing facilities and electronic transfers for higher liquidity. At least one deposit required to activate account benefits.

For detailed information about how money market funds operate in Australia, their fee structures, and comparison with other cash management options, visit Canstar’s money market fund guide which explains the mechanics and benefits of these professional cash management solutions.

11. Bank Hybrid Securities for Regular Income

Bank hybrids combine debt and equity features with regular dividend payments from major Australian banks. Franking credits provide tax-efficient income for Australian investors seeking higher interest than standard savings account products.

Hybrid Interest Rates

Bank hybrids 6-8% per annum including franking credits with quarterly interest payments. CBA PERLS and ANZ Capital Notes offer after-tax returns through franking credit benefits for Australian account holder investors.

Investment

Buy through stockbrokers on ASX. Minimum $1,000 per investor. Professional advice recommended for complex features and investor suitability.

Research conversion triggers and call dates. Understand ranking in bank capital structure. Monitor bank credit ratings regularly to protect investment goals.

Income Stream

Franking credits for personal finance. Higher interest than senior bank debt. Quarterly dividend distributions for ongoing savings goals.

Listed securities for liquidity. Professional analysis from brokers. Suitable for income-focused portfolios seeking more interest than conservative options.

For comprehensive information about how bank hybrids work, their specific terms and conditions, and the risks involved, review CommBank’s detailed explanation of bank hybrid securities which provides insights into these complex but potentially rewarding investment instruments.

12. Fixed Income Managed Funds for Professional Interest  Growth

Managed funds provide professional active interest management across multiple fixed income securities. Expert credit analysis and portfolio management for regular distributions while accessing institutional investment opportunities that can earn more interest than individual savings account management.

Managed Fund Distributions

Professional managers aim for 4-7% per annum across multiple bond types. Realm’s High Income Fund offers competitive returns with diversification benefits, higher interest than standard savings account products from the same provider networks.

Benefits of Diversified Fund Returns

Apply directly with fund managers with minimum deposits typically $25,000 for wholesale or lower minimum balance requirements for retail. Regular investment plans and automatic distribution options available through online platforms for easy access and management, for various savings goals with professional oversight.

To explore Australia’s fixed income managed fund landscape, compare fund performance, and find funds that match your investment objectives, use Fixed Income News Australia’s managed fund finder which provides comprehensive search and comparison tools for fixed income investment options.

Complete Comparison of All 12 Interest-Earning Methods

Conclusion

Smart Aussies have many proven ways to earn interest beyond basic savings accounts. Start with high interest savings accounts for your emergency fund, then diversify into government bonds and term deposits for guaranteed returns. As you get more comfortable, try P2P lending, corporate bonds and managed funds for higher returns.

The key is to match each to your risk tolerance and goals. Whether you need daily access through offset accounts or professional management through cash trusts, 2025 has options across all risk levels. Start with the safer options and build your interest earning portfolio over time.