Rates for savings accounts 'declining'

In recent months, banks have reduced the interest rates on savings accounts as the outlook for lending remains slow.

The Sydney Morning Herald reported that the rates for some term deposits and online savings accounts have declined by as much as 46 basis points, which it observed is the equivalent to a two-notch reduction in the cash rate.

Banks have cut their savings rates because the demand for lending has dipped and Aussies are showing a greater desire to save than spend.

In August alone, banks in the country generated $8 billion more in deposits than was needed to lend to consumers, according to data from Deutsche Bank.

With interest rates falling, Aussies may want to compare savings accounts online before selecting a product.

This comes after John Oliver, director and senior adviser at Goldsborough Financial Services, said in a piece for National Features that many older Aussies are using money in savings accounts to help their children rather than for retirement.

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