Pain continues for Aussie savers as interest rates continue downwards
Aussie savers took another hit today after ME Bank announced a cut to its previously market-leading ongoing bonus savings account rate.
The lender cut its ongoing bonus savings account rate by 10 basis points to 2.95% leaving the market without an ongoing rate in excess of 3.00%.
The cut comes after competitor, ING Direct, recently slashed its Savings Maximiser from 3.00% to 2.80%. ME is now the tenth bank to have cut savings account interest rates since July 1.
The change continues to paint a pretty bleak picture for Aussie savers. Data from Mozo confirms the downward trend in average ongoing savings account rates which have dropped from 2.05% to 1.82% over the last year.
“Ever since the RBA last cut rates, all of the bank’s deposit rates have being going down. It was quite impressive that ME held on for so long considering how little competition for deposits there are among banks at the moment,” said Mozo’s Data Manager, Peter Marshall.
With savings account rates in free fall, there is an obvious temptation for consumers to stash their cash in a term deposit account at a fixed rate.
According to Mozo’s term deposit database, there are four providers currently offering the most competitive term deposit interest rates but consumers will need to lock their money away for two years if they want to earn the same 3.00% on offer from savings accounts.
For this reason, Marshall believes that there is still value in savings accounts.
“At call deposits still offer reasonable value considering you can take your money out at any time,” he said.
ME’s most recent cut means the top three ongoing savings account rates are now:
- RAMS Saver Account- 3.00% - Minimum deposit of $200 and no withdrawals in the month
- AMP Bett3r Save Account - 3.00% - Minimum deposit of $2,000 per month into linked Bett3r Pay Account from an external source
- Australian Unity Active Saver - 3.00% - Minimum deposit of $250 and no withdrawals in the month
Mozo’s quick tips to maximise your savings account return:
- Make regular deposits - the more money in your account, the more money you will be making
- Be aware of the terms - regular deposits or no withdrawals are often conditions to earn that bonus rate
- Set up automatic payments - make sure you’re not leaving any unnecessary cash in a transactional account earning little or no interest
Want to learn more? Read Mozo’s dedicated guide to high interest savings accounts.