Average savings account interest rate has dropped to 1.88%

It’s been a race to the bottom during 2017, with 18 financial providers having already slashed savings account interest rates this year, according to Mozo data.

Many providers have been cutting interest rates on both savings accounts and term deposits since the beginning of the year, despite the fact that the RBA cash rate has been on hold at 1.50% for the past 6 months.

In fact, things are looking increasingly dire for savers, as one in five savings accounts now pay an interest rate lower than the official cash rate. And what’s more, the average interest rate has now dipped below 2.00%.

“The average ongoing savings accounts rate is now a shockingly low 1.88% – nearly 45 basis points lower than what it was just 12 months ago,” said Mozo Director Kirsty Lamont.

The dropping savings interest rates come at the same time as many home loan customers are being hit with out of cycle rate hikes - particularly investors, who have also had lending criteria tightened by a few big players, like CommBank and Bankwest.

RELATED: 2017 Mozo Experts Choice Awards reveal the best place for Aussies’ savings

The good news is that while savers might be feeling the squeeze of low interest rates, there are still plenty of good savings account offers on the market for those willing to search for them. But to get the best interest rates on offer, it seems, savers may have to be willing to put a little extra effort into their rainy day fund.

“Savers can snag rates up to 3.05% if they are prepared to meet some conditions such as making a weekly Tap & Go purchase on a linked everyday transaction account, minimum monthly deposits or not making withdrawals in the month,” said Lamont.

Here are the top 5 savings accounts rates at the moment:

ProductInterest rateConditions
ME Online Savings Account3.05%When you make a weekly Tap & Go purchase with your ME Everyday Transaction Account linked Debit card.
RaboDirect High Interest Savings Account3.05%For the first 4 months from account opening.
AMP Bett3r Save Account3.00%When you make a minimum deposit of $2,000 per month into the linked Bett3r Pay Account.
Australian Unity Active Saver3.00%When you make a minimum deposit of $250 and no withdrawals in the month.
ING Direct Savings Maximiser3.00%When you also have an Orange Everyday Account and deposit your pay of at least $1,000 each month.

Rates and information correct at time of writing. Please click links for current information.

You can also head over to our savings account comparison tool to compare 196 offers to find the one that will work best for your savings style.