Are savings accounts good in times of economic uncertainty, or is a fixed rate safer?

Economic uncertainty partly caused by recent tariffs has seen big drops in the stock market this week. As you would expect, people are understandably anxious about their cash. 

But what about savings accounts? Are they still a good option in this kind of environment? Or is fixing your rate perhaps better?

Let’s have a look.

Why savings accounts remain a good option

If your number one concern is safety, then savings accounts are one of the best places to keep your cash. Yes, banks tend to be safe places to keep money. 

But, even in the unlikely event that they do collapse, the government will guarantee deposits of up to $250,000 under the financial claims scheme.

So safety isn’t such a concern. What about getting your cash working for you?

Some economists and financial institutions (like Deutsche Bank) have come out saying that the tariffs could result in a 50 basis point cut when the RBA meets on 19-20 May. This means that you’d see the interest rate on your savings account reduce, which isn’t great news.

This is why constantly comparing savings rates is so important.  

Start with comparing between leading rates but you can also compare savings account rates against the rate of inflation. This will help make sure that the cash you’ve got is either keeping up or growing faster than the rate of currency depreciation. 

For context, current CPI from the 12 months to the December 2024 quarter was 2.4%, so any savings rate above that is a good ballpark figure to compare against.

Currently, as of today, the average ongoing bonus interest savings rate on our database is 4.41% p.a. for account holders with $10,000

Term deposits as a savings accounts alternative

As we’ve indicated, savings rates might be in flux. So if you want to lock in a rate, and have the spare cash to do so, then a term deposit might be a good alternative option. 

However, just keep in mind that a term deposit means committing to keeping cash stored. You can usually apply for a 31 day notice withdrawal, but this means losing some or all your interest and potentially paying an early withdrawal fee. 

Right now the average term deposit rate ($25,000 deposit) on a one year term is 4.23% p.a. while for 2 years the average is 3.77% p.a. Of course, rates differ between terms, but this at least gives you an idea of what type of rates are generally on offer.

Where to get started with Savings and Term Deposits

You can compare savings accounts or compare term deposits by heading over to our respective hub pages or checking out the table below. Alternatively, if you’re looking to learn a bit more, you can read our savings account guides or term deposit guides.