ACCC savings enquiry welcome but customers should take matters into their own hands

RateCity welcomes any ACCC investigation into savings account interest rates, however, customers need not wait for the outcome of an inquiry to get a competitive deal.

The Federal Treasurer has confirmed he has asked the ACCC to investigate competition in the savings sector, as the gap between the highest and lowest savings rates continues to widen. The latest APRA statistics show Australian households currently have $1.33 trillion in the bank – a record high – yet many savers are still earning less than 1 per cent on their hard-earned cash.

For example, Westpac eSaver customers are currently on an ongoing savings rate of just 0.85 per cent, despite the fact the cash rate has risen by 3 percentage points since last May. However, Westpac customers with a Life savings account have seen their maximum ongoing interest rate rise by 3.50 percentage points to 3.75 per cent – more than the 3 percentage points prescribed by the RBA.

Similarly, ANZ Online Saver customers are earning an ongoing rate of 0.60 per cent, while ANZ Plus Save customers are earning 3.75 per cent with no monthly terms and conditions.

Big four banks: maximum ongoing rates for existing customers

Source: RateCity.com.au Note: monthly conditions apply for some ongoing rates. Data accurate as of 11/01/23.

Pressure on banks to increase savings rates 

An analysis of the RateCity database shows that:

• 17 banks are now offering ongoing savings rates of 4 per cent and over (excludes kids accounts).
• 20 banks have hiked at least one ongoing savings rate by more than the cash rate increase of 3 percentage points.
• Around 90 banks have increased at least one ongoing savings rate by LESS than the 3 percentage point increase from the RBA.

Future Saver Account (Under 35)

• Bonus interest with conditions
• Linked account required

Young adults can enjoy one of the most competitive interest rates on a savings account for their nest eggs.

Maximum rate p.a.

5.50%*

Base rate p.a.

0.05%

More details

FeaturedAustralian Credit Licence: 244616 BOQ terms and conditions

RateCity.com.au research director, Sally Tindall, said: “It’s great to see the government shine the spotlight on sub-standard savings accounts, however, customers don’t need to wait for an inquiry to find out if they’re on a dud rate.” 

“After each RBA hike, many banks have been picking and choosing which savings accounts get a boost, and which miss out,” she said.

“An ACCC inquiry will put pressure on banks to start hiking the rates on savings accounts that are trailing behind the competition. 

“It’s ludicrous to think that some accounts are still offering ongoing savings rates below 1 per cent, when the market leaders now have rates over 4.50 per cent.

“Savings customers should aim for an ongoing rate that’s above the current cash rate, at an absolute minimum. Anyone earning less than this is getting fleeced.

“Even switching within your own bank could potentially see your savings rate skyrocket overnight. For example, ANZ’s Online Saver customers are getting just 0.60 per cent, while the bank is offering Plus Save customers more than six times this amount, at a rate of 3.75 per cent.

“Take an hour out of your week to put your savings rate under the spotlight and potentially make a change. 

“Banks have done a fantastic job of streamlining their application processes so you’re likely to find you can open a new account within a matter of minutes.

“Before you make a switch, read the fine print to make sure you’re picking an account that suits your lifestyle and your finances.  

“There’s no point opting for an account with a high saving rate if you can’t jump through the hoops required to get the maximum amount of interest on offer,” she said. 

Tips for opening a new savings account

1. Compare rates: Not all savings accounts are created equal. Look at what rate you’ll be getting on an ongoing basis and make sure you can meet any terms and conditions easily.
2. Beware of introductory rates: Some accounts offer new customers a high rate for the first three to five months, after which time the rate often plummets. Unless you’re planning to switch accounts regularly, you might be better off looking for a different account.
3. Have your documents ready: Most savings accounts will require an official ID (such as a driver’s licence or passport) and your Tax File Number.
4. Fill in the application: The form isn’t likely to ask you anything overly complicated, typically it will ask for your full name, date of birth, email address and phone number. 
5. Start saving: Consider setting up a direct debit into your new savings account to help you save.

Highest ongoing savings rates on RateCity database

(excludes kids accounts)

Source: RateCity.com.au. Data accurate as of 11/01/23

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