As the Aussie interest rate holds, savers should look for better rates

After the Reserve Bank’s recent May meeting, it seems Australia's cash rate is going to hold at 4.35% a while longer. 

This might be good news for savers because a number of savings accounts are hovering at an interest rate well above 4% and in some instances above 5% - holding in this way as the official rate goes unchanged. 

But I’m only getting around three-and-a-half per cent on my savings, you cry! Let’s see what can be done about this.

Comparing standard savings and bonus savings accounts

Yes, at first glance savings rates don’t look all that positive this year and according to the Mozo database, the current average ongoing savings rate is just 3.47% pa. 

And yet, any smart saver knows that the heavy lifting of saving money is done by comparing savings accounts. Mozo’s recent Savings Report showed that Aussies who switch savings accounts have an average savings amount of $35,100, whereas those who have never switched have an average of $21,700. 

Furthermore, Aussies who have switched savings accounts in the past 12 months also have a higher average savings rate (4.53% pa on average), 0.82% higher than those who have never switched (3.71% pa on average), as per Mozo’s report.

So switching to a better rate is crucial.

Average savings rates versus bonus rates

To this end, our Mozo experts say that the average bonus savings rate is 4.79% pa, while the average introductory rate is 4.69% pa - each much higher than the average for all savings accounts that many Aussies are currently stuck with. 

The difference is worth weighing up, despite the typically short term period of a bonus interest rate and the varied conditions that usually need to be met to receive such a rate. 

Switching to a better rate might ultimately mean more money in your pocket over the course of a year or more and that’s the bottom line. 

How to better compare savings accounts

Most of us tend to stick with what we know. And yet, a mediocre interest rate can easily be ditched if you’re willing to take a minute to review some of the best savings accounts around.  

So let’s briefly have a look at few examples in the high interest savings account category:

Rabobank has a high interest savings account at 5.75% at the time of writing. Of course this is a temporary bonus rate and drops after 4 months. For example, for balances under $250,000 you'll get a rate of 4.40% pa once the introductory period ends. For balances of more than $250k the interest rate drops to 3.40% pa. There are further conditions worth noting. 

Macquarie Bank is currently offering 5.35%. This is also an intro rate. After 4 months, balances between $0-$250,000 will receive an interest rate of 4.75% and balances between $250,000-$1,000,000 get an interest rate of 4.75%. There are again further conditions to consider. 

AMP’s Saver Account is at 5.40% right now. With this one savers can earn the full rate on the first $250,000 of their account balance - a 1.20% pa standard variable rate, plus a variable bonus of 4.20% pa - if they make eligible deposits of at least $1,000 in the previous month. Again, always best to review all of the conditions to understand how such an account works.

What can we learn from this simple savings check? 

In short, each of these offerings is a much stronger option - in terms of interest rates at least - than the current average rate. This simple exercise shows that with some basic comparison, you can hypothetically grow a solid savings amount by a good chunk of change each year. 

Be sure to start your comparison right here at Mozo, where our experts have handpicked some of the best savings accounts on the market. Remember, any comparison between savings accounts needs to factor in all the criteria required to receive the highest rate on offer.