Savers receive fresh slap in the face as rate cut trend continues in 2021
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2020 was a tough year for Australian savers. The financial impact of COVID-19 aside, three cuts to the official cash rate from the Reserve Bank helped further accelerate the ongoing decline in savings account rates.
Given that the cash rate now sits at a historic low of 0.10% you could be forgiven for thinking that the drop in savings rates would ease in 2021 though, but sadly for savers, that hasn’t been the case so far.
Since the start of the year there have been 34 cuts to at-call savings rates being tracked in the Mozo database, with the most recent reductions adding to a total of 202 savings rate cuts overall since the RBA’s November rate move.
The result? In the past 12 months the average ongoing savings account rate in our database has more than halved - dropping by a considerable 53 basis points from 0.97% to 0.43%.
Deposit safety still a pull factor
Among the banks to have cut savings rates so far in 2021 are three of the four major players: NAB reduced rates on its iSaver and Reward Saver accounts, Westpac trimmed rates on its Life and eSaver accounts, while the Commonwealth Bank made a reduction on its NetBank Saver.
As a result, the average ongoing big four savings rate is now just 0.19%, and the highest ongoing rates (available to all adults^) are as follow:
Ongoing rate | Monthly conditions | |
ANZ - Progress Saver | 0.50% (on balances over $0) | Yes |
CBA - GoalSaver | 0.45% (on balances over $0) | Yes |
NAB - Reward Saver | 0.40% (on balances over $0) | Yes |
Westpac - Life | 0.40% (on balances over $0) | Yes |
It turns out that interest rates might not be the number one priority for all savers though, especially in uncertain times.
New Mozo research has revealed that 52% of Australian savers believe that the major banks offer a safer option to store their money, while only 7% believe that it is more advantageous to bank with a smaller bank during the current economic climate.
While the demise of neobank Xinja in December may be weighing on some minds, Mozo Director, Kirsty Lamont, says that savers shouldn't forget about the Financial Claims Scheme which acts as a government-backed safeguard for Australian deposit customers.
“With the recent news of a neobank going under, it’s perhaps unsurprising that many savers are willing to forgo a better return on their money in exchange for the perceived security of the top end of town,” says Lamont.
“But when it comes to deposits under $250,000, the reality is your money is protected by the government deposit guarantee scheme. So failing to bank the extra interest you can earn through a smaller deposit taker doesn’t really add up.”
Online banks among the rate leaders
What about those savers who are searching for a more lucrative rate and are happy to deposit their savings in a non-major bank though?
Well when it comes to the savings accounts with the highest interest rates currently in the Mozo database, there’s plenty of choice - from large institutions like Macquarie and ME, to neobanks like 86 400 and Up.
As the table below shows, the Savings Maximiser account from online bank ING is certainly has the standout rate at present though, sitting well above our average ongoing rate of 0.44%.
Highest ongoing savings account rates^ - Mozo database (February 1, 2021)
Ongoing rate | Monthly conditions | |
ING - Savings Maximiser | 1.35% (on balances up to $100,000) | Yes |
86 400 - Save Account | 1.20% (on balances up to $50,000) | Yes |
Macquarie - Savings Account | 1.20% (on balances up to $250,000) | No |
ME - Online Savings Account | 1.20% (on balances up to $250,000) | Yes |
MyState Bank - Bonus Saver Account | 1.20% (on balances up to $250,000) | Yes |
“As ever with personal finance products your best option is to compare all rates and move your money to where you can get the best value,” says Lamont.
RELATED: 5 easy savings tactics to try in 2021
Ready to find a more rewarding savings account to match your savings ambitions? Compare over 200 different accounts over at the Mozo savings account comparison hub, or check out some of the great offers in the table below.
^While the Westpac Life (18-29 years old) account currently offers the highest ongoing savings account rate in our database, it is only available to those aged between 18 and 29 years of age.
Compare savings accounts
-
Mozo experts choice awards won:
- High Interest Savings - 2024
Savings Maximiser
5.50% p.a. (for $0 to $100,000)
0.55% p.a.(for $0 and over)
Yes up to $250,000
For customers who have an Orange Everyday account, deposit $1000 into a personal ING account, make 5 eligible transactions and grow their nominated Savings Maximiser account each month.
Great variable rate every month when you grow your balance each month in addition to other eligibility criteria. No ING fees to pay. Save even more with ING Everyday Round Up. Mozo Experts Choice Awards Everyday & Savings Bank of the Year winner for 2024.^
CompareCompareSavings Maximiser
Great variable rate every month when you grow your balance each month in addition to other eligibility criteria. No ING fees to pay. Save even more with ING Everyday Round Up. Mozo Experts Choice Awards Everyday & Savings Bank of the Year winner for 2024.^
- Maximum rate
- 5.50% p.a. (for $0 to $100,000)
- standard interest rate
- 0.55% p.a.(for $0 and over)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $0.00
- Maximum rate conditions
- For customers who deposit $1000 from an external source into a personal ING account (excluding Orange One and Living Super), make 5 eligible transactions and grow their nominated Savings Maximiser account each month so there is more in the account at the end of the month than there was at the start of each month (excluding interest). The total bonus interest rate is available on balances up to $100,000 on one Savings Maximiser the next month after meeting eligibility.
- Access
- Phone banking, Internet banking
- Minimum balance
- $0.00
- Other restrictions
- Must be linked to an Orange Everyday transaction account to receive the bonus rate. Where multiple Savings Maximiser Accounts are held, the bonus rate is only applied to one nominated account.
Read our Mozo Review to learn more about the ING Savings Maximiser
-
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.
CompareCompareReward Saver Account
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.
- Maximum rate
- 5.25% p.a. (for $0 to $1,000,000)
- standard interest rate
- 0% p.a.(for $0 and over)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $0.00
- Maximum rate conditions
- 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.
- Access
- ATM, EFTPOS, Visa Debit, Cheque book, BPay, Branch access, Phone banking, Internet banking, Bank@Post
- Minimum balance
- $0.00
- Other restrictions
- -
Read our Mozo Review to learn more about the IMB Bank Reward Saver Account
-
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 4 months.
Competitive introductory variable rate for first 4 months (on deposits up to $250,000). No account keeping fees to pay. Multiple 2024 Mozo Experts Choice Award winner.
CompareCompareSavings Account
Competitive introductory variable rate for first 4 months (on deposits up to $250,000). No account keeping fees to pay. Multiple 2024 Mozo Experts Choice Award winner.
- Maximum rate
- 5.35% p.a. (for $0 to $250,000)
- standard interest rate
- 4.75% p.a.(for $0 to $1,000,000)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $0.00
- Maximum rate conditions
- Bonus variable rate is available for the first 4 months.
- Access
- BPay, Branch access, Phone banking, Internet banking
- Minimum balance
- $0.00
- Other restrictions
- Must have a Macquarie Transaction Account to link with.
Read our Mozo Review to learn more about the Macquarie Savings Account
-
Mozo experts choice awards won:
- Kick Start Savings - 2024
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. No Account keeping fees. No minimum balance. Support Aussie farmers with every dollar you save.
CompareCompareHigh Interest Savings Account
Reward yourself with a higher rate for your good savings habits with the Rabobank High Interest Savings Account. No Account keeping fees. No minimum balance. Support Aussie farmers with every dollar you save.
- Maximum rate
- 5.75% p.a. (for $0 to $250,001)
- standard interest rate
- 4.40% p.a.(for $0 to $250,001)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $0.00
- Maximum rate conditions
- Bonus rate for the first 4 months from account opening, reverting to standard variable rate. Rate shown is for Personal customers and is subject to change. Different rates apply to Business/SMSF customers.
- Access
- Internet banking
- Minimum balance
- $0.00
- Other restrictions
- Must link to a transaction account
Read our Mozo Review to learn more about the Rabobank High Interest Savings Account
-
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
Minimum $100 monthly deposit and no withdrawals to earn bonus interest each month.
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.
CompareCompareSavings+Bonus
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.
- Maximum rate
- 5.00% p.a. (for $0 to $250,000)
- standard interest rate
- 2.00% p.a.(for $0 to $250,000)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $5.00
- Maximum rate conditions
- Minimum $100 monthly deposit and no withdrawals to earn bonus interest each month.
- Access
- -
- Minimum balance
- $1.00
- Other restrictions
- Must become a First Option Bank member to open an account.
Read our Mozo Review to learn more about the First Option Bank Savings+Bonus
-
Bonus Saver Account
5.00% p.a. (for $0 to $250,000)
0.05% p.a.(for $0 and over)
Yes up to $250,000
Bonus rate when at least $20 is deposited each month and five Visa Debit transactions are made each month using linked Glide transaction account.
Start saving and earn interest with just a $20 deposit and make 5 eligible transactions each month. No fees or penalties for withdrawing money.
CompareCompareBonus Saver Account
Start saving and earn interest with just a $20 deposit and make 5 eligible transactions each month. No fees or penalties for withdrawing money.
- Maximum rate
- 5.00% p.a. (for $0 to $250,000)
- standard interest rate
- 0.05% p.a.(for $0 and over)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $0.00
- Maximum rate conditions
- Bonus rate when at least $20 is deposited each month and five Visa Debit transactions are made each month using linked Glide transaction account.
- Access
- Phone banking, Internet banking
- Minimum balance
- $0.00
- Other restrictions
- Must link to a transaction account
Read our Mozo Review to learn more about the MyState Bank Bonus Saver Account
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^See information about the Mozo Experts Choice Savings Account Awards
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