The RBA has left the cash rate on hold for the 18th consecutive meeting today, marking the longest period in history without moving official interest rates.
For mortgage holders the RBA’s decision will be welcomed, however for people relying on their savings accounts won’t be popping the champagne anytime soon.
RateCity.com.au data shows that on average, the maximum rate offered by an online savings account with a balance of $10k, was 1.90 per cent – on par with inflation.
RateCity.com.au spokesperson Sally Tindall said first home buyers and pensioners were among the hardest hit by the record low cash rate.
“The harsh reality is, most savings accounts don’t even match inflation these days, which makes shopping around all the more important.
“The first trick to picking a savings account is to understand the types of rates on offer. Bonus rates that offer high rates look good on paper but when you scratch the surface you’ll discover the interest plummets after three or four months.
“Look for a savings account that offers a decent rate on an ongoing basis. While these accounts usually have some conditions attached – such making regular deposits – if you can meet these requirements you’re likely to be better off in the long run.
“Whether you’re an avid saver or someone who just wants a place to stash your spare change, it’s worth comparing your savings account at least once a year.
“Tax time is often a moment of truth for savings accounts as people tally up how much interest they’ve earnt. You might find your savings report card isn’t quite hitting the A+ average you were hoping for,” said Ms Tindall.
Savings accounts – average rates
Average max rate
Average base rate
Shopping for a savings account – terminology
Base rates: the amount of interest you’ll earn on an ongoing basis without meeting additional requirements.
Bonus rates: high rates offered for just a few months before reverting back to the base rate.
Conditional rates: rates that you can get on an ongoing basis provided you meet some requirements, such as depositing a certain amount each month or not making any withdrawals.