The 5-minute move that could save you almost $1,000

The Canstar database shows the average ongoing savings rate is just 3.07%.

However, a handful of banks are still offering 5% or more, for now. Canstar data shows that just last week, six banks had savings rates of 5% or higher. This week, that has dropped to just four after BCU and P&N Bank cut their top rates to 4.90%.

Someone with $50,000 in savings could earn an estimated $1,333 interest a year in an account at the current average ongoing savings rate. However, opening a market-leading account could see them earn an estimated $2,330 interest in a year – an extra $997 for a move that takes just minutes. These calculations do not factor in any additional deposits a person may have, and do not factor in forecasted rate cuts.

Meanwhile, APRA data released this week shows Australians squirrelled away an extra $6.3 billion in the month of May and now have a record $1.62 trillion in household bank deposits.

Bank loyalty costing Aussie savers

Canstar’s data insights director, Sally Tindall says, “Millions of savers have missed out on hundreds, potentially thousands of dollars in interest by loyally sticking with their bank.”

“Some savings customers are still on interest rates below 1 per cent, which is ludicrous when the cash rate is 3.85 per cent and the market leaders are now paying 5 per cent and higher.

“You might be kicking yourself for not acting sooner, but it’s not too late to switch and start earning a decent amount of interest.

“Even switching savings accounts within some banks could quadruple or even quintuple a customer’s rate. For example, existing Westpac eSaver customers are still only getting a rate of just 1 per cent, yet the bank is offering Life customers an ongoing rate of 4.50 per cent.

“Meanwhile, ANZ is paying existing Online Saver customers a rate of 0.90 per cent, yet Plus Save customers will be earning a rate of 4.5 per cent.

“The banks are now willing to offer proactive savers decent rates but they’re still dramatically short-changing complacent customers who have their money in dud accounts.

“Savers earning less than the cash rate should consider voting with their feet. Banks need deposits to help fund their home loans. The more people switch, the more likely the banks are to chase customers with decent rates.

“Don’t let the admin of switching banks put you off. Find a savings account that suits your finances and pays a decent rate of interest. Once you’ve landed on the right account, opening it up can take as little as five minutes.”

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.

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