Aussies could be earning more interest on their savings, says ACCC

A new report released today by the Australian Competition and Consumer Commission (ACCC) shows that many savers may be sticking with savings accounts that aren’t in their best interest. 

The Retail deposit inquiry report found that only 16% of Australians had switched their main savings account in the last three years, but also suggested that part of the problem is that banks are making it harder for customers to compare and switch.

Considering the average ongoing bonus savings rates in the Mozo database have spiked from 1.02% p.a. in November 2020 to 4.31% p.a. in November 2023, Australians may be missing out on higher interest rates from their current bank’s competitors. 

This is even more alarming when you consider that Australians store over $1.4 trillion in savings accounts, as per the ACCC.

Average bonus savings rate is higher but many of us are missing out

The ACCC’s report also noted that the majority of Australians with bonus rate savings accounts aren’t meeting the conditions required to earn them their bonus. 

In the first half of 2023, 71% of bonus interest rate account holders didn’t meet the eligibility conditions to get their bonus interest credit on average each month. 

This could effectively wipe out an otherwise high savings interest rate, replacing it with a base rate that, by comparison, is functionally useless.  

One of the highest ongoing bonus rates in the Mozo database is ING’s Savings Maximiser account, at 5.50% p.a.

However, the bonus criteria required of savers to get that rate include: 

• Depositing $1,000 per month 
• Opening an Orange Everyday transaction account 
• Making 5 eligible transactions per month with a linked ING card
• Growing your savings balance each month. 

If those conditions aren’t met, the 5.50% p.a. rate shrinks to just 0.55% p.a.

So, consumers who don’t meet the bonus conditions are doing themselves a disservice by choosing a bonus interest savings account in the first place. But there are other types of savings accounts out there. 

The ACCC’s report says, “These consumers would likely benefit from switching to an account in which they could regularly meet the bonus rate conditions, or has a higher (unconditional) base interest rate.” 

Take MOVE Bank’s Growth Saver account as an example of a bonus savings rate with fewer hurdles to clear (although there is a significant difference in the balance cap, compared to ING’s account). 

The Growth Saver account is currently the highest ongoing bonus savings rate in the Mozo database (as at 15 December 2023) at 5.75% p.a., provided the bonus conditions are met. 

However, if Growth Saver customers make a withdrawal from their savings account or fail to deposit at least $200 per month, that high rate of interest plummets to 0.10% p.a.

Still, the MOVE Bank Growth Saver account’s minimum deposit of $200 is a much lower hurdle than ING’s $1,000 minimum and doesn’t require customers to grow their balance or make card transactions. 

But even if consumers aren’t able to consistently save a certain amount each month, there are plenty of unconditional base rates out there that rival many of the bonus offerings – although you may still have to link them to a transaction account at the same bank.  

How to make sure you’re getting the best savings rate you can

Getting a better savings rate is in your control, despite what the banks do. That’s what we specialise in at Mozo - financial product comparisons!

When you compare savings rates on our site, keep an eye on the standard interest rate column as, even if the account offers a bonus rate, a high standard rate will grow your savings faster than a low one. 

To get started, check out some of the featured products that Mozo tracks below.