Savings rates plummet: What’s a saver to do?

Not everyone was cheering when the Reserve Bank announced a 0.25% basis point cut to the cash rate this month. Anyone with an at call savings account will have noticed their once ‘high interest’ savings account has fallen dramatically over the past few months.

According to data crunched by our team of Rate Chasers, headline rates are down by as much as 80 basis points since 1 October, and it’s the most competitive savings players that appear to be leading the downwards charge. Previous market leaders, UBank and RAMS have slashed their rates by 0.80% and 0.58% respectively.

The top rate on the market prior to 1 October was 5.75% (UBank USaver). The top rate is now just 5.17% (RAMS Saver) but on Dec 14, 2012 this is set to drop to 4.82%.

We’ve also seen a shift from high intro period offers for new customer towards incentives that reward loyalty. ING recently introduced a 0.75% loyalty bonus for its Savings Maximiser Account customers who after the intro period deposit at least $200 a month into the account. And this week, ME Bank have introduced a 12 month 1.60% fixed bonus rate on its Online Savings Account, the longest bonus rate in the market.

So, what’s a saver to do?

The answer is, that now more than ever, savers need to proactively compare the best rates on offer to make sure that they are not getting paid peanuts on their money. And while at one point it made sense to move your money over into a fixed term deposit to lock in top rates that’s no longer the case.

The top 6 month term deposit rate right now is the Bank of Queensland’s Premier Investment term deposit at 4.70%. For the same 6 month term, the top savings accounts without any deposit or withdrawal conditions are ME Bank’s Online Savings Account and the Bankwest TeleNet Saver which both have a special rate of 5.10%.

5 Savings Accounts with rates over 5%

Provider Special Rate Conditions for special rate
RAMS Saver 5.17% $200 monthly deposit and no withdrawals
ING Savings Maximiser 5.10% 4 month welcome rate, and 0.75% loyalty bonus with monthly deposits of $200 after welcome period.
Bankwest Telenet Saver 5.10% 6 month from opening account
Bank of Melbourne Maxisaver 5.10% 5 month bonus rate
ANZ Online Saver 5.00% open by Dec 14 and earn 1.75% bonus rate until 30 April 2013.

Do you have a question about Savings Accounts? Ask the money mavens on Mozo Answers?

Savings rates plummet: What’s a saver to do? was last modified: December 12, 2012 by Kylie Moss

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