Last week’s Reserve Bank of Australia cash rate freeze announcement was good news for variable borrowers, with repayments on hold for at least the rest of the month. But new research has revealed there is even better news for Aussie savers, with saving interest rates on the rise – some almost twice as high as the current cash rate.
The research, by RateCity, shows stiff competition in the savings sector with some interest rates listed as high as 4.6 percent (at the time of writing), that’s 2.10 percentage points above the cash rate.
It found that one in five online savings accounts has a maximum rate of 4 percent or higher, and ranging up to 4.6 percent. That is 0.11 percentage points above the lowest variable home loan rate of 4.49 percent.
With some saving interest rates now higher than some variable home loan rates, money savvy Australians can start taking advantage of the competitive savings space and start earning real rewards for every dollar they put away.
“If your savings account doesn’t have a ‘4’ in front then it’s time to shop around and get a better deal,” Alex Parsons, CEO of RateCity.com.au, said.
“Interest rates haven’t favoured savers in recent years, and even now the average online savings rate is just 3.14 percent, while the top 12 month term deposit rate is 3.9 percent on $50,000 deposits. Yet there is competition at the pointy end of the market.”
Parsons recommends shopping around and comparing a range of online savings accounts, outside of just the big top four banks.
“It’s not just the big four banks that offer attractive rates for online savings accounts – smaller banks like UBank, ME Bank RaboDirect and ING Direct all offer great rates now,” he said.
Australian Bureau of Statistics (ABS) figures show a rising trend in cash deposits Australia-wide, which could be the result of people saving to get into the competitive housing market while low home loan rates continue to hold.
“We know there is strong demand for high deposit rates from households, which have a record $831 billion in cash and term deposits, according to latest ABS figures,” Parsons said.
“ABS data shows deposits represented 22.1 percent of household financial assets in the December quarter, compared with the decade average of 20 percent.”
With saving interest rates attractively high and households now more engaged in regular saving, it’s a great opportunity for Australians to shop around for a competitive deposit account that is going to allow individuals and families to achieve their saving goals.
“Not surprisingly, the first thing most people look at to compare savings accounts is the interest rate,” he said. “It’s a good place to start, but you need to go one step further and look at the bonus or promotional rate.”
“Deposit accounts is one area of the banking and finance market that’s incredibly competitive, where ‘switching costs’ are low, and information is plentiful. There’s no reason to be stuck with a low-interest account, so compare online savings accounts and start generating more interest income today.”