Savers receive fresh slap in the face as rate cut trend continues in 2021

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 rateMonthly conditions
ANZ - Progress Saver0.50% (on balances over $0)Yes
CBA - GoalSaver0.45% (on balances over $0)Yes
NAB - Reward Saver0.40% (on balances over $0)Yes
Westpac - Life0.40% (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 rateMonthly conditions
ING - Savings Maximiser1.35% (on balances up to $100,000)Yes
86 400 - Save Account1.20% (on balances up to $50,000)Yes
Macquarie - Savings Account1.20% (on balances up to $250,000)No
ME - Online Savings Account1.20% (on balances up to $250,000)Yes
MyState Bank - Bonus Saver Account1.20% (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 - last updated 29 March 2024

Search promoted savings accounts below or do a full Mozo database search. Advertiser disclosure
  • 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.

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  • 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.

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  • 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.

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    Details
  • Reward Saver

    5.25% p.a. (for $0 to $100,000)

    0.30% p.a.(for $0 and over)

    Yes up to $250,000

    Earn a high interest bonus rate if you hold an eligible transaction account and meet the bonus rate conditions (T&Cs apply). Only requires $1 to open. Free e-banking transactions. No monthly service fees to pay. Access your account via e-banking or the Bendigo Bank app. Not applicable to business customers.

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  • 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.

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  • High Interest Save Account

    5.10% p.a. (for $0 to $250,000)

    0.10% p.a.(for $0 and over)

    Yes up to $250,000

    Deposit at least $200 to either Spend or Save account from an external source each month.

    No monthly fees on any of your save accounts. Split your money with up to 10 Save accounts. Set savings targets and track the progress of all your Save accounts. Deposits guaranteed up to $250K per customer.

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^See information about the Mozo Experts Choice Savings Account Awards

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