New highest savings rate hits market at 5.65%

The highest ongoing savings rate has hit 5.65 per cent, with ME Bank officially launching its HomeME savings account today.

The savings account, announced as part of a wider launch of new savings and transaction products, is available via the ME Go app and available for balances up to $100,000 for Australian residents aged 14 and over.

Importantly, this rate is the only savings account that is currently higher than the monthly inflation rate of 5.6 per cent.

To be eligible for the maximum rate customers need to deposit $2,000 into a linked transaction account each month and grow the balance of their HomeME savings account (excluding interest).

ME Bank is also launching a range of five charity linked Visa debit cards. Customers can choose to support either National Breast Cancer Foundation, Beyond Blue, Australian Wildlife Conservancy, Minus18 and Orange Sky with ME donating 1 cent to the charity every time customers tap their digital wallet.

These cards are a low fee option with no monthly account keeping fees, no currency conversion fees and no domestic and international ATM withdrawal fees from ME Bank. However, the ATM provider may charge a fee.

Highest ongoing savings rates on RateCity.com.au

Source: RateCity.com.au. Monthly terms and conditions apply for max ongoing rate.

Gap widening between the highest and lowest savings rates

ME’s savings account puts another rung between the highest and lowest ongoing savings rates some of which are still sitting at 0.00 per cent, while the lowest ongoing savings rate from a big four bank is 1.10 per cent on Westpac’s eSaver account.

RateCity.com.au research shows that a balance of $50,000 could potentially earn $2,350 more over the next year in a ME Bank HomeME account, as opposed to Westpac’s eSaver as an existing customer, provided they met the monthly terms and conditions.

Interest saved on a balance of $50,000 for ME Bank HomeME vs Westpac eSaver

Source: RateCity.com.au Note: assumes monthly terms and conditions are met for max available interest on highest savings account. Assumes Westpac customer is on ongoing rate. Does not factor in extra deposits or withdrawals. Based on CBA’s cash rate forecast.

RateCity.com.au research director, Sally Tindall, said: “ME Bank’s new charity linked transaction accounts will appeal to many customers looking to provide extra support these fantastic organisations. With no currency conversion fees and no ATM fees from ME Bank, it’s a low-cost bank account option with a positive twist.”

“Finally, we’ve got a bank offering its savers an interest rate that’s currently higher than inflation, with the latest CPI figures clocking in for the month of May at 5.6 per cent annually,” she said.

“This highest rate could force the market leaders to reconsider their position. When it comes to savings rates, ING, in particular, isn’t used to playing second fiddle,” she said.

“This account also puts extra pressure on the big four banks to keep their savings rates competitive. If enough savers start switching to market-leading accounts, then our largest banks will be forced to follow.

“Unsurprisingly, customers opening up this new account will have to jump through the usual hoops to qualify for the maximum interest rate each month, but anyone focused on saving up for something big, such as a car or their first home, are likely to make sure they clear these hurdles.

“If you’ve got money in the bank, make hay while the sun is shining, because with many economists predicting cash rate cuts in 2024, it might not last as long as you’d like,” she said.

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