For many Aussie savers, finding a top notch place to stash their savings seems to be getting harder by the day.
Recent Mozo data has shown that despite the Reserve Bank having held off from making another rate cut since October 2019, banks big and small have continued to slash savings accounts rates.
Since the start of February alone, ten banks have cut rates by up to 0.15%, with Westpac, Suncorp, Bank of Melbourne, BankSA and St. George among those in the naughty corner.
According to Mozo Director, Kirsty Lamont, following the Reserve Bank’s decision to reduce the official cash rate to 0.75%, bank profit margins have taken a hit and lead many to make rate reductions in anticipation of a future rate cut.
The result? A pitiful average ongoing savings rate of just 0.97%^.
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However, a new stream of banking options may provide Aussie savers with the interest boost they’ve been looking for.
“With rates continuing to fall it’s more important than ever for savers to maximise their savings by shopping around,” said Lamont.
“The ray of light for savers right now has been the entry of neobanks to the market with exceptional rates bringing much-needed competition.”
While neobanks, Xinja, Up and 86 400 all share an ongoing rate of 2.25%, Up and 86 400’s rate is conditional, meaning savers will need to meet criteria before they can earn the interest.
Aussies with 86 400 will need to deposit $1,000 into either their transaction or savings account every month, while Up only requires savers to make five card purchases each month.
Xinja offers a ‘no strings attached’ 2.25% rate, which means that savers are set to earn the rate no matter what, while Volt offers an unconditional rate of 2.15%.
While it’s not uncommon for Australians to be sceptical about investing their hard-earned savings into an new financial institution, Lamont explained that neobanks are regulated just like traditional banks and are protected under the Australian Government Guarantee Scheme, which safeguards deposits of up to $250,000.
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But for the Aussies who might need a little more certainty over the interest they'll receive on their investment over a longer period of time, Lamont says it might be worth considering a term deposit.
“You could consider a term deposit to help protect yourself from further rate cuts this year,” she said.
“Right now you can still get 1.90% on a 12-month term deposit.”
So if you’d like to find out if you could be earning a better return on your savings, head on over to our savings account comparison tool, or get started by checking out current offers below.
^At the time of writing