February savings: Rate cuts slow but steady in the new year

Couple looking at bills and finances, considering savings interest rates.

You can make all kinds of new years savings resolutions, but you can’t control interest rates.

And unfortunately, the downward trajectory of savings rates has continued into 2021.

While it didn’t match the 60 reductions in December, the 32 savings rate cuts recorded in Mozo’s database over the last month aren’t encouraging for anyone trying to grow their stash.

It leaves the average ongoing savings rate at a dreary 0.43% – another five basis points lower than where we left it in 2020.

Bonus rates lose appeal

The accounts hit hardest at the start of the year have been those with ongoing bonus rates. 

These are the savings accounts which offer additional interest earnings for following certain conditions. This might be depositing a set amount each month, making a minimum number of transactions via a linked bank account and debit card, or not withdrawing from the account at all – or a combination of all of these.

If the incentive to squirrel away cash in the bank doesn’t glimmer with the promise of years gone by, you may want to explore other avenues to make your money work for you. 

So, what else can you do with your savings?

  • Make voluntary super contributions 

Adding to this retirement fund can be a sensible long-term investment, as you’ll generally receive a better return on cash in your superannuation fund, which is also not taxed as high as your take-home pay. 

In the short term, it could be useful for anyone saving to buy their first home. The First Home Super Saver Scheme lets you make up to $30,000 in additional contributions over two years which you can withdraw (with some tax benefits) when you’re ready to purchase a home. Plus, you’ll be earning that solid super interest while it simmers there.

  • Consider a home loan with an offset account

If you are looking to take out a home loan or refinance, an offset account can be a useful way to reduce the cost of your mortgage. It functions like a standard bank account, but reduces the portion of the loan which you pay interest on by whatever amount sits in the account.

Say you are paying down a $400,000 mortgage and have $15,000 in savings. By storing this in an offset account you’ll only pay interest on $385,000, which can amount to impressive savings over time.

  • Build an emergency fund then focusing on paying down debt

It’s important to have a financial buffer to cover urgent or unexpected expenses like medical treatment or car repairs. But once you have your emergency savings fund sorted, cutting debt out of your life should be high on your list of financial priorities.

Most debts accrue interest the longer they linger, and can quickly spiral out of control if you owe money to multiple creditors. A debt consolidation loan can help you take control of this situation by bundling what’s owed into a single repayment plan with manageable interest.

Whatever amount you do have sitting in your piggy bank, you want it to be earning the best interest rate possible. So start researching high interest savings accounts with a few of the options below.

Compare high interest savings accounts - last updated 23 October 2021

Search promoted savings accounts below or do a full Mozo database search. Advertiser disclosure
  • Boost Saver with Go Account
    Maximum rate
    standard interest rate
    Govt Deposit Guarantee
    1.50% p.a. (for $0 to $250,000)
    0.10% p.a.(for $0 and over)
    Yes up to $250,000

    Intro bonus rate of 1.50% for first 3 months, reverting to 1.20% after. Deposit $2,000 each month and make 5 eligible payments from your Go Account. If you are between 18 and 25 deposit $1,000.

    Enjoy a savings account bundled with a spending account. No monthly fees. New customers can earn up to 5000 bonus Virgin Money points on purchases (conditions apply). Benefit together with a joint account

    Details
  • Online Saver
    Maximum rate
    standard interest rate
    Govt Deposit Guarantee
    1.10% p.a. (for $0 to $500,000)
    0.35% p.a.(for $0 and over)
    Yes up to $250,000

    Bonus rate for the first 4 months from account opening

    No account keeping fees. No minimum balance required. Unlimited phone and internet transactions.

    Details
  • Grow Saver
    Maximum rate
    standard interest rate
    Govt Deposit Guarantee
    0.65% p.a. (for $0 and over)
    0.10% p.a.(for $0 and over)
    Yes up to $250,000

    Make at least 1 deposit and no more than 1 withdrawal, including internal transfers or external payments.

    Earn a maximum interest rate of 0.65% per year. Pay no monthly fees. Set up in-app savings goals. Benefit with joint account options.

    Details
  • High Interest Savings Account
    Maximum rate
    standard interest rate
    Govt Deposit Guarantee
    1.35% p.a. (for $0 to $250,001)
    0.25% p.a.(for $0 to $250,001)
    Yes up to $250,000

    Bonus rate for the first 4 months from account opening

    Kick start your savings with the 4 month introductory variable rate. No fees, no minimum balance, no minimum monthly deposit and no minimum term.

    Details
  • Fast Track Saver Account
    Maximum rate
    standard interest rate
    Govt Deposit Guarantee
    1.05% p.a. (for $1 to $250,000)
    0.05% p.a.(for $1 and over)
    Yes up to $250,000

    Ongoing bonus rate applied if in the previous month $1,000 or more is credited to the linked Day2Day Plus account and 5 eligible transactions are made by the linked account.

    Earn 1.05% p.a. Bonus Interest in the following month on your Fast Track Saver Account balance. Earn Bonus Interest on your savings, with no minimum balance required.

    Details

^See information about the Mozo Experts Choice Savings Account Awards

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