Macquarie Bank has today revealed changes to its popular savings account, with cuts of 25 basis points in effect across its tiered variable account.
The previous ongoing rate (base rate) on offer from Macquarie Bank for balances of $0 - $249,999.99 was 1.20 per cent. It has now been slashed to 0.95 per cent.
Macquarie savings account changes:
|Account balance||Old variable interest rates||New variable interest rates|
|$0 and $249,999.99||1.20%||0.95%|
|$250,000 and $999,999.99||0.95%||0.70%|
|$1,000,000 and above||0.95%||0.70%|
Macquarie Bank’s introductory savings account still offers a competitive 1.10 per cent for the first 4 months. However, as one of the few savings accounts offering ongoing rates above 1 per cent, this news may come to the surprise of some customers.
Macquarie Bank joins the ranks of 50 other savings account providers who’ve cut interest rates since 1 January this year, according to RateCity research. There have been 171 changes to savings accounts in 2021, with only one being a rate increase.
Why are savings rates so low?
The decline of savings account interest rates in Australia has been an ongoing process, with three Reserve Bank of Australia cash rate cuts in 2020 influencing the low-rate environment.
Strict stay at home regulations due to Covid-19 also meant that many Australians were no longer spending money at the same rate. In fact, we’re squirrelling away more savings than we have in recent years.
The latest APRA Household Deposit data shows that the banks currently hold over $1.1 trillion in deposits from households. Over the course of 2020, Australians have increased their deposits by $125 billion, or 12.65 per cent.
|Deposits by households||$1,112,871,900,000||$1,112,597,200,000||$998,739,600,000||$987,914,700,000|
|MoM/cumulative change ($)||/||$274,700,000||$114,132,300,000||$124,957,200,000|
|MoM/cumulative change (%)||/||0.02%||11.43%||12.65%|
Source: APRA Household Deposits, RateCity.com.au.
What that means for your savings account is that the increasing size of household deposits puts pressure on the banks, who need to pay interest on said growing nest-eggs. This, paired with an already low-rate environment, means that savings account providers are more inclined to not only cut interest rates, but cut them out-of-cycle with the RBA.
RateCity research found that since pre-Covid-19 regulations (1 March 2020), the average savings account rate has fallen from 0.86 per cent to 0.36 per cent today (26 February 2021). This is a decrease of 50 basis points.
Who is still offering a high interest savings account?
There are still a range of savings account providers offering customers competitive interest rates. However, you may need to consider switching from the bank you’ve been with since you were a kid to nab one of these interest rates.
Some savings accounts offer bonus interest rates for those willing to meet certain conditions, such as depositing a certain amount each month or making no withdrawals.
You may also find a competitive rate with introductory ‘standard’ savings accounts, which offer high introductory rates for a set period of time that then revert to a lower ongoing rate.
Highest ongoing savings accounts on RateCity database
|MyState Bank||Bonus Saver Account|
|86 400||Save Account|
|ME Bank||Online Savings Account|
Source: RateCity.com.au. Data accurate as of 26.02.2021. Conditions apply for max interest rate.
Highest standard savings rates on RateCity database
|Bank||Product||Intro rate (4 months)||Ongoing rate|
|Rabobank Australia||High Interest Savings Account|
|Heritage Bank||Online Saver|
|Macquarie Bank||Macquarie Savings Account|
Source: RateCity.com.au. Data accurate as of 26.02.2021.
Unfortunately, wherever you look, savings account interest rates are continuing to decline. If you’re hoping to earn a high rate of return on your savings, you may need to consider either constantly comparing your options and account hopping, or even investigating other investment options for 2021.