How to stop your savings rate from dropping along with the RBA in 2020
The new year hasn’t started with a bang for Aussie savers, but rather a whimper. Right now, the average savings account rate in the Mozo database sits at a paltry 0.98%,* and may tumble even further over the year, as our money experts predict two more RBA cuts are in the pipeline for 2020.
But don’t despair savers, there’s good news too.
Over 10 providers in our database have interest rates 2.00% or above, including neobanks like 86 400 and Up who are both leading the market with 2.25% maximum savings rates, given you meet their monthly conditions.
How much you’d save by switching
Even in a low interest rate environment it is worth your while to shop around and move money between accounts, particularly if you’ve got most of your money parked in your everyday bank account earning no interest at all.
Let’s say you have $5,000 in savings and you’re depositing $500 monthly into your account over 5 years. According to our Savings Calculator, just by switching from the market average of 0.98% to 2.25%, you’d be pocketing $2,316 - or more than double the interest you would have earned with the poorer rate ($985). That’s a staggering $1,331 difference!
“Most savings accounts can be set up online in a matter of minutes and don’t have pesky account fees attached so there really isn’t any excuse for leaving your money parked in an account with a dud interest rate,” said Money expert and Mozo director Kirsty Lamont.
Quick savings account tips and traps
When picking the right savings account for your cash stash, keep an eye on:
- Rates that flirt and revert: Introductory or honeymoon rates of as high as 2.50% can be snatched up right now. While these deals are attractive to any keen saver, keep in mind they may revert to a much lower rate once the introductory period ends so unless you are prepared to move your money around every couple of months, look for a higher base interest rate.
- Special conditions: Many savings accounts offer a special bonus rate if you fulfil certain conditions, like making a minimum deposit or a minimum number of withdrawals every month. If you don’t meet these conditions, your interest rate could plummet so make sure you opt for one of these accounts only if you can tick their boxes without having to go out of your way to do so.
- Market up and downs: As savings rates are variable and fluctuate with the market, it’s always wise to keep your eyes peeled for better offers that might pop up.
Aiming to build your savings this year? Then there’s not a minute to waste! Below are some high interest savings accounts that could help you earn bigger bang for your buck, or you can head over to our savings account comparison table for even more options.
*Average as of 2 January 2020.