What could a rate hike mean for your savings? Some of the top-rated savings accounts for July 2024

Reports indicate that inflation may be sticking around for longer than the Reserve Bank of Australia (RBA) would prefer. This means there’s a chance the central bank could raise the national cash rate again before the year is out, which could have a knock-on effect on your savings.

The latest monthly Consumer Price Index (CPI) figures from the Australian Bureau of Statistics (ABS) show that annual inflation increased for the third month in a row and is at 4.0% May, the highest level since November of last year. While the monthly inflation figures are generally considered less reliable, the quarterly figures were at 3.6% in the March 2024 quarter, with the latest figures due for release at the end of July 2024.

Previously, the RBA hiked the national cash rate 13 times since May 2022, with the goal of bringing inflation back down into a target band of between 2% and 3%. While economists from some leading banks are broadly predicting that the RBA’s next move will still be a rate cut, its arrival may need to be pushed back until 2025, rather than before the end of the year as previously predicted. And depending on the upcoming data, the RBA may choose to consider hiking the national cash rate for a 14th time to help keep a lid on the bubbling inflation pot.

So, what could this mean for your savings? Well, when the RBA changes the national cash rate, banks adjust their own interest rates accordingly. While higher interest rates are rarely welcomed by mortgage holders and other borrowers as it can increase the cost of their repayments, savers may find the news more positive. Higher interest rates on savings accounts could mean earning more interest on your wealth, allowing you to reach your savings goals that little bit faster.

Interest rates on savings accounts are important, as if your savings account doesn’t earn more interest than the current inflation rate, your money may be effectively going backwards (though you also need to consider taxes). But there’s more to a savings account than just the interest rate – you also need to consider any fees they may charge, any terms and conditions they require, and any extra features and benefits they may offer.

To help you quickly get a better idea of which savings accounts may be best for you, RateCity’s Real Time Ratings™ combine the interest and flexibility of different savings accounts and their features into a single simple star rating. Some of the top-rated savings accounts that are ranked on RateCity’s Savings Account Leaderboards may also become eligible for the RateCity Gold Awards.

(Rankings are correct at the time of publishing. Please note banks may trade places on the list as interest rates and fees change and RateCity’s tracker reflects these movements.)

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