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$703 more: Complacency is costing savers

·Personal Finance Editor
·3-min read
People walk the streets of Sydney and a person removing $50 notes from a wallet to represent savers.
Savers could be earning far more interest on their cash by switching banks. (Source: Getty)

Complacent savers are potentially missing out on hundreds of dollars in interest, as the gap widens between some of the highest and lowest savings rates on the back of the Reserve Bank of Australia (RBA) hikes.

The Big Four banks’ online savings accounts currently offer an average ongoing rate of just 0.33 per cent, despite the fact the cash rate has risen by 1.25 percentage points since May, according to data from RateCity.

However, the highest ongoing rate available to all adults is currently 2.60 per cent – a gap of 2.27 percentage points, when compared to the average Big Four online rate.

RateCity analysis found if a person had a minimum of $50,000 in one of the banks’ traditional online savers, they would have earned only $39 interest on this amount over the past 12 months.

However, if their money was in a market-leading account, that same $50,000 could have earned up to $742 in interest – a difference of $703, assuming the monthly conditions were met to earn the maximum rate.

Even within their own bank, Big Four customers would do well to shop around, RateCity said.

While the banks’ traditional savings customers had missed out on the lion’s share of the rate hikes, their bonus saver customers had fared much better.

Savings accounts – change in last year

Account

1 yr ago

Today

Change

Big4 online savers (avg existing)

0.05%

0.33%

0.28%

Big4 bonus savers (avg)

0.34%

1.25%

0.91%

Market leader for all adults - ING

1.35%

2.60%

1.25%

Cash rate

0.10%

1.35%

1.25%

Source: RateCity.com.au. Conditions for max rate apply for ING. Excludes introductory rates for new customers.

“The gap is widening in savings rates, and many Big Four bank customers are being left behind,” RateCity research director Sally Tindall said.

“While competition forced the big banks to pass on decent hikes to some savers after the July decision, not all customers got a decent boost.”

Tindall said now was the time for savers to shop around for a better deal, especially given rates were expected to keep rising.

“If you’re still getting paid peanuts on your hard-earned cash, it could be time to take your savings to a bank that values it more,” she said.

“A rising cash rate should be good news for savers, but with inflation tipped to reach 7.75 per cent by Christmas, the next six months will be difficult for many households.

“Finding a rate that matches inflation might be impossible in this market, but the harder you fight for your nest egg, the better it will weather the storm.”

Current highest ongoing savings rates on RateCity for adults

Bank

Max ongoing rate

Balance for max rate

ING

2.60%

$100,000

Virgin Money

2.60%

$250,000

Australian Unity

2.50%

$500,000

Source: RateCity.com.au. Notes: terms and conditions apply for maximum rates.

 

Current highest ongoing savings rates on RateCity for young adults

 

Bank

Max rate

Balance for max rate

BOQ Future Saver (14-35)

3.00%

$50,000

Westpac Spend&Save (18-29)

2.75%

$30,000

Source: RateCity.com.au. Notes: terms and conditions apply for maximum rates.

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