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Complacent savers lose out, despite rate hikes

Complacent savers lose out, despite rate hikes

01 Aug, 2022 - 5 min read

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 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 in the last three RBA meetings.

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

RateCity.com.au analysis shows if a person had a minimum of $50,000 in one of the banks’ traditional online savers, they would have earned $39 interest on this amount over the last 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.

Big four bank online savers vs market leader – interest earned over 1 year

	Interest earned - last 12 mths	Difference
Avg big four online saver (existing customer)	$39
Market leader for all adults - ING	$742	$703

Source: RateCity.com.au. Conditions for max rate apply for ING. Excludes introductory rates for new customers. Maths is based only on the initial deposit of $50k, excludes any other deposits being made.

Even within their own bank, big four customers would do well to shop around. While the banks’ traditional savings customers have missed out on the lion’s share of the rate hikes, their bonus saver customers have fared much better.

Savings accounts – change in last year

	Max ongoing rates
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.

RateCity.com.au analysis shows an increasing number of banks have hiked at least one savings rate after each RBA decision. Following the July announcement, 79 per cent of banks lifted at least one savings rate, while 71 per cent hiked in June and 56 per cent in May.

Eleven banks have matched or gone above the RBA’s 1.25 percentage point increase since the start of May. Some examples include:

ING increased its Savings Maximiser by a total of 1.25% to a max ongoing rate of 2.60%. This is the highest ongoing rate for all adults.
Credit Union SA increased its Bonus Savings by a total of 2.24% to a max ongoing rate of 2.50%.
Australian Unity increased its Active Saver by a total of 1.75% to a max ongoing rate of 2.50%.
Bank of Queensland increased its Smart Saver by a total of 1.55% to a max ongoing rate of 2.35%.

RateCity.com.au research director, Sally Tindall, said: “The gap is widening in savings rates, and many big four bank customers are being left behind.”

“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,” she said.

“Big four bank customers with a bonus saver account have seen their maximum rate rise to over 1 per cent, but the banks’ existing online saver customers are well and truly being taken for a ride.

“Australia’s cash rate has risen by 1.25 percentage points since the start of May, yet, on average, the big banks’ online savings accounts have gone up by just 0.28 percentage points for existing customers.

“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.

“ING and Virgin Money have the leading savings rate of 2.60 per cent for all adults, while Bank of Queensland is offering young adults up to 3.00 per cent – that’s more than double what’s on offer from Australia’s biggest bank.

“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,” she said.

Current highest ongoing savings rates on RateCity.com.au for all 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.com.au 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.

Big four banks – BONUS SAVERS

Bank	Account	Max rate
CBA	GoalSaver	1.25%
Westpac	Life	1.35%
NAB	Reward Saver	1.25%
ANZ	Progress Saver	1.15%

Source: RateCity.com.au. Conditions for max rate apply.

Big four banks – ONLINE SAVERS

Bank	Account	Max intro rate	Ongoing rate
CBA	NetBank Saver	1.30% for 5 months	0.35%
Westpac	eSaver	1.25% for 5 months	0.30%
NAB	iSaver	1.30% for 4 months	0.35%
ANZ	Online Saver	1.05% for 3 months	0.30%
ANZ Plus	Save	N/A	2.00%

Source: RateCity.com.au.

Current highest Term deposit rates on RateCity.com.au for up to 12 months

Bank	Rate	Term
AMP Bank	3.50%	11 mths
Qudos Bank	3.00%	11 mths
Judo Bank	2.90%	9 mths

Source: RateCity.com.au.

Big four banks – TERM DEPOSITS (highest available rate)

Bank	Highest rate	Term
CBA	2.50%	11 mths
Westpac	2.50%	12 mths
NAB	2.50%	12 mths
ANZ	2.50%	11 mths

Source: RateCity.com.au.

Disclaimer

This article is over two years old, last updated on August 1, 2022. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent savings accounts articles.

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Product database updated 22 Dec, 2024

This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

Laine Gordon

Money Editor

Laine Gordon is the Money Editor at RateCity and an experienced journalist and research specialist. With a background in news and feature writing, covering finance, media and even food (a passion of hers) at Reed Elsevier publications, Laine brings almost two decades of experience to the team. Having covered major areas of interest to the general public from hip pocket issues to rising and falling interest rates and the impact to mortgages, credit and saving in Australia, she is passionate about researching and telling people’s stories to help others make better decisions about their own finances.