Different types of interest
There are two ways interest can be applied to bank accounts.
Compound interest has a snowball effect on your savings – over time your savings grow as interest is added. You earn interest on the money you deposit, and on the interest that has previously been paid into your account - so you earn interest on interest.
ANZ Progress Saver or ANZ Online Saver are examples of accounts where you can earn interest on interest that has previously been paid to your account.
With simple interest, interest is paid at an agreed frequency and is not added to the closing balance of the account.
ANZ term deposits are an example of accounts that earn simple interest.
How interest rates work
- A fixed rate account pays interest on your money at a specified rate that doesn't change for a specified period. This can provide certainty as you know how much interest your savings will earn over the fixed term.
- A variable rate account, on the other hand, can offer more flexibility as you typically have access to your money at any time. However, the amount of interest you earn can move up or down.
- A tiered rate means you will earn different rates of interest depending on the balance of your account. If your account balance is above a certain level, we will pay a higher rate of interest on the whole balance.
- A banded rate of interest means that different rates of interest apply to different parts of your account balance. For example, the interest we pay on the part of your balance between $10,000 and $20,000 may be different from the interest we pay on the first $9,999 of the balance.
How interest is calculated
For ANZ Online Saver accounts, ANZ Access Advantage accounts, ANZ Progress Saver accounts, ANZ Premium Cash Management Accounts and ANZ Pensioner Advantage accounts we will work out interest on the balance of your account at the end of each day.
For ANZ term deposits, interest accrues daily, based on the closing balance of the term deposit account on the relevant day. The rate of interest is fixed for the term of your term deposit (subject to any adjustments for early withdrawals).
We will tell you the annual interest rate for the particular term that you have chosen when you establish a term deposit (and, if applicable, after a maturing term deposit is reinvested in a new term deposit). The daily interest rate is the rate fixed for the term of your deposit divided by 365.