For many Australians, a savings account is the most accessible and flexible outlet for the money they’re looking to save. But as prospective savers know all too well, the value offered by savings accounts isn’t what it was a few years ago.
In fact, banks, including some of the big four, have cut savings account base rates even further in recent months meaning many savers can look forward to returns of just 1% or less on the money they deposit.
But saving is not just important for regular Aussies, it’s just as vital for businesses who are looking to earn interest on any excess funds they have on hand.
Unfortunately the picture isn’t any prettier here for business savers, with figures from the Mozo database indicating that there have also been a number of base rate reductions to business savings accounts since January 1.
The Mozo data revealed that AMP, ANZ, Bank of Queensland, Macquarie, RaboDirect and Suncorp have all made cuts of between 5 and 25 basis points since the start of the year.
Why are some savings account rates heading south?
In order to deal with increased funding cost pressure, many Australian banks have been steadily lifting home loan and term deposit rates in the last few months, but the same has not been the case for savings account base rates.
According to Mozo Product Data Manager Peter Marshall, banks have to meet capital adequacy ratios set by regulators and at call deposits count for less than term deposits in that assessment, so are less important to the banks.
“Accounts that don't have any conditions attached, whether withdrawal restrictions or bonus rates paid in exchange for growing your balance, are probably least appealing for banks at the moment,” he said.
“That's why we've been seeing base rates discounted on simple accounts that sometimes have a short term introductory rate period for customers across virtually all institutions.”
Think it’s time to compare rates for yourself to make sure your business is taking advantage of the best rate it can? Get started by comparing a range of offers over at the Mozo business savings account hub, or read on for some of the features you should look out for in an account.
What are the features to look out for with a business savings account?
- Rates: Like normal savings accounts you’ll want to maximise the return on your cash with the highest interest rate possible, so ensure you weigh up the bonus introductory rate on any business savings account with the ongoing base rate. The interest rate may also vary depending on your account balance.
- Fees: The vast majority of business savings accounts won’t charge an ongoing monthly fee, but make sure you take into account any fees you’ll need to pay on a linked business bank account.
- Free Transactions: Many providers will provide their business savings account customers with unlimited free transactions, but watch out for accounts that cap or charge for over the counter or non-internet based transactions.
- Minimum Opening Balance: Some business savings accounts will come with an opening balance requirement from as little as $0 to $10,000 or more.
* Rates accurate as of July 30.