Australian savers see real value of money shrink – here’s what you can do to fix it

Australian savers are facing a hidden challenge as the interest earned on their savings accounts struggles to keep pace with the rising cost of living. Mozo figures reveals that while the average savings rate sits at 3.09% p.a.*, the real return for many is minimal, and in some cases, negative.

The latest inflation data from the Australian Bureau of Statistics (ABS) shows a monthly CPI inflation figure of 2.80%. This figure is a critical benchmark for savers because it erodes the purchasing power of their money.

When the average savings rate is adjusted for inflation, the real rate of return is just 0.29% p.a.

This can be calculated with the following equation:

3.09% p.a.* (interest rate) − 2.80% (inflation rate) = 0.29%

This means that while the number of dollars in your savings account may be increasing, the amount of goods and services those dollars can buy is barely growing.

The state of savings account rates right now

Savings rates can vary widely depending on whether you’re chasing ongoing bonus conditions, short-term introductory offers, or unconditional base rates. To give you a clearer picture, here’s how the average, median and best rates stack up across personal accounts and among the Big Four banks.

All personal accounts*

Big Four banks*

The unconditional rate problem

The situation is particularly dire for customers of Australia's Big Four banks who are on accounts with low "unconditional" or "base" rates. These accounts often pay a small amount of interest to savers who don't meet strict conditions, such as making a minimum monthly deposit or avoiding withdrawals.

Mozo data shows that the average unconditional rate from the Big Four is just 0.65% p.a.* When this is adjusted for inflation, the real rate of return is in negative territory. For these savers, the value of their money is actively shrinking over time. 

This can be calculated as:

0.65% p.a.* (unconditional rate) − 2.80% (inflation rate) = -2.15%

These so-called savers are drastically losing purchasing power, a trend that is unlikely to reverse as long as inflation remains a significant factor in the economy.

Take action to improve your savings’ return rate

For many Australians who rely on savings to build a financial buffer, it is more important than ever to be proactive. Here are some steps you can take:

• Compare savings accounts. Savings rates can vary significantly based on whether they offer ongoing bonus conditions, short-term introductory offers, or unconditional base rates. Assess and compare different savings accounts to ensure you receive a competitive rate.
• Seek better rates. Mozo’s database shows the best ongoing rate across all accounts (5.00% p.a.*) is significantly higher than the average (3.09% p.a.*). For accounts with bonus rates, the best rate (5.00% p.a.*) is an entire percentage point higher than the average (4.00% p.a.*).
• Avoid low-interest accounts. Be aware of accounts with low unconditional or base rates, especially those from the Big Four banks, as they typically offer minimal returns.

*Source: Mozo database. $10,000 balance. Figures shown are accurate as of 10 September, 2025.