Yahoo Finance Why younger savers are ignoring banks
Continuing high inflation will engulf the savings from tax cuts, but a micro-investment founder says younger Australians are getting more savvy looking for better value on their savings deposits.
With federal Labor’s tax changes that took effect on July 1, a worker earning $70,000 can on paper expect $1429 to be wiped from their tax bill.
But if inflation keeps running at 3.8 per cent, money sitting idly not accruing interest will keep being worth less and less.
However, co-founder of micro-investment savings platform Blossom, Gaby Rosenberg, said Australians aged 25 to 35 driven by high inflation and mounting debts were getting smarter with where they laid their nest eggs.
As the country waits eagerly for every signal it can deduce from the Reserve Bank about a possible rate cut, Australian banks have started sparingly and unevenly reducing lending and term-deposit rates.
An analysis by RateCity.com.au shows 23 banks have cut interest rates on at least one of their term deposits for new customers, including Commonwealth Bank, NAB and ANZ, since August 1.
Fifteen banks have increased rates on at least one of their term deposits since the start of the month.
But banks have not cut mortgage rates to the same degree.
Ms Rosenberg said companies like hers were giving the Australian masses access to fixed returns, and one-third of Blossom’s 21,000 customers were saving for a house deposit.
Daily returns being visible in the app were steadily attracting customers since the company’s launch in 2022, Ms Rosenberg said.
She hopes the disparities between the banks’ own loan and deposit rates will drive customers to small outfits like Blossom, with its 5.95 and 7 per cent targeted return options.
