SAVERS leaving their cash in the bank need to pay close attention to interest rates as they continue to fall in 2020.
The big banks including National Australia Bank and ANZ in the past few weeks have taken the knife to savings rates.
And with strong predictions of further cash rate cuts this year, this downward trend is tipped to continue for some time yet.
New data from financial comparison website RateCity shows the highest introductory savings account rates are just 2.65 per cent and this is only for a short period of four months before dropping to a dismal 0.35 per cent.
And, among the big four banks, the introductory rates on savings accounts vary from 1.55 per cent to 1.66 per cent before plummeting to as low as 0.05 per cent.
RateCity spokeswoman Sally Tindall urged savers to look for a “savings account or term deposit where you can meet the terms and conditions”.
“It also needs to deliver you a competitive rate in this low-rate environment which isn’t easy to do,” she said.
“You have to decide whether you choose a term deposit where you lock your money up versus a savings account.”
The Reserve Bank of Australia cut the cash rate to 0.75 per cent in October and is strongly expected to reduce the rate again in the coming months, pushing down both saving and borrowing rates.
ING head of daily banking George Thompson said as savings rate continued to fall, “it’s about the mindset of whether you are getting the best deal”.
“Ultimately you are going to get less than inflation on your savings in the future,” he said.
“Household deposits are still growing annually at 5 per cent rolling growth so people are definitely saving across the variable and fixed market.”
Mr Thompson urged consumers to use online financial comparison sites to compare deals.
He defended the bank’s decision and said it “regularly reviews pricing on term deposits and savings accounts”.
The arrival of neobanks – digital-only challenger banks – is also increasing competition in the market, Ms Tindall said.
“Check what other banks are offering because there is quite a bit of competition in the savings rates space, especially now the neobanks have come onto the market,” she said.
Neobank Xinja recently rolled out a new savings account deal paying customers 2.25 per cent on their deposits.
The bank’s chief executive officer, Eric Wilson, said “there’s no introductory period, no minimum deposit and no mandatory monthly top-up”.
Originally published as Scoring the best savings rates