Is interest rates rising good for savers?

Kids sitting on stairs eating fruit, considering savings.

With many banks raising their home loan interest rates, we may hear a cheer on the breeze from savers who’ve suffered through cut after cut to their interest earnings. The recent interest rate rises have seen a boost for savings accounts.

The reasons for this are multilayered. While mortgage holders are seeing their home loan interest rates gradually rise alongside the cash rate, increases to savings rates often lag behind. But we've seen several banks increase their savings accounts and term deposits. Some accounts even start with a '3'!

But why are savings accounts so slow to increase? This is effectively because banks want to earn more through the interest they charge borrowers before passing on any earnings to deposit account holders. It’s a balancing act that banks will naturally want to see-saw in their favour.

But these calculations are a little more complicated than give and take. Over the last 12 months, the consumer price index (CPI) rose by 3.5%. This is only one measurement that gives insight into the cost of living in Australia (and doesn’t account for existing property price growth), but it’s a relatively accurate way of assessing everyday costs most Aussies have to fit in their budgets.

And consumers are sure to be noticing an increase, with 2021 ending on a quarterly CPI rise of 1.3%. The Reserve Bank of Australia, which regulates the cash rate, aims to keep inflation steady between 2-3%.

Considering the 2021 wage growth index only showed a 2.2% annual rise, this effectively leaves consumers worse off. They’re paying more for necessities with wages that haven’t grown comparatively, meaning the money sitting in their bank accounts can’t buy as much, and thus isn’t as valuable. Hence why every news network is talking about the raising cost of living crisis.

When you throw interest rate cuts (or the very slow and minimal rises we’ve begun to see recently) into the mix, this adds to that losing equation for savers.

What is a good interest rate for a savings account in 2022?

Five years ago, savers were laughing with average interest rates of 1.59%, according to the Mozo database. At the start of 2020, before the pandemic reached Australia’s shores, this had fallen to 0.96%.

At the time of publishing, the average savings account interest rate in Mozo’s database was 1.27%, with the highest ongoing bonus rate open to savers of all ages sitting at a 3.10% (offered through the ING Savings Maximiser). So we're slowly getting there to the era of higher interest rates.

If you’re aged 18-29, you can score the higher rate of 3.25% on balances under $30,000 with a Westpac Life account (again, so long as you meet the conditions).

As always, a “good” rate can only be defined by the individual, as different accounts often come with criteria you’ll need to meet in order to receive the headline return on your balance. If you want to explore what’s best for you as savings rates (hopefully) begin to pick back up, start by comparing some of the options below.

Compare savings accounts - last updated 16 April 2024

Search promoted savings accounts below or do a full Mozo database search. Advertiser disclosure
  • Mozo Expert Choice Badge
    High Interest Savings Account

    5.75% p.a. (for $0 to $250,001)

    4.40% p.a.(for $0 to $250,001)

    Yes up to $250,000

    Bonus rate for the first 4 months from account opening

    Reward yourself with a higher rate for your good savings habits with the Rabobank High Interest Savings Account . Receive the maximum rate when you grow your balance by at least $200 each month. No Account keeping fees. No minimum balance.

  • Savings Account

    5.35% p.a. (for $0 to $250,000)

    4.75% p.a.(for $0 to $1,000,000)

    Yes up to $250,000

    Bonus variable rate is available for the first four months.

    Competitive introductory variable rate for first 4 months (on deposits up to $250,000). No account keeping fees to pay. Multiple 2023 Mozo Experts Choice Award winner.

  • Reward Saver Account

    5.25% p.a. (for $0 to $1,000,000)

    0% p.a.(for $0 and over)

    Yes up to $250,000

    Intro bonus rate of 5.25% for balances up to $1,000,000 for the first 4 months, reverting to 3.25%. Minimum deposit of $50 and no withdrawals.

    Introductory bonus rate for balances up to $1,000,000 for the first 4 months. Minimum deposit of $50 and no withdrawals. Start your account online in under 10 minutes and earn interest on balances up to $1,000,000 (T&Cs apply). No monthly account fees, helping you save smarter and faster.

  • Mozo Expert Choice Badge
    AMP Saver Account

    5.40% p.a. (for $0 to $250,000)

    1.20% p.a.(for $0 to $5,000,000)

    Yes up to $250,000

    Enjoy a bonus rate when you deposit at least $1000 per month with the AMP Saver Account.

    No account fees. Unlimited transactions when linked to an AMP Bank transaction account. Easy online access to your money. Option to link your savings account to an everyday transaction account. 2024 Mozo Experts Choice Award winner.

  • Savings+Bonus

    5.00% p.a. (for $0 to $250,000)

    2.00% p.a.(for $0 to $250,000)

    Yes up to $250,000

    Earn a generous interest rate on your at-call savings (T&Cs apply). Interest is calculated daily and paid to you monthly. A $5 monthly membership fee will not apply if your total account balances with First Option Bank exceed $1,000 or you have a credit card or loan with the bank.


^See information about the Mozo Experts Choice Savings Account Awards

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