Interest rates on online savings accounts and term deposits have been slowly falling this year since the Reserve Bank of Australia (RBA) brought the official cash rate down to just 1% in July with a second consecutive rate cut.
Close to 60 lenders on Canstar’s database – including the major banks – have reduced their online savings interest rates, by an average rate of 0.40 percentage points. The average base rate on these accounts is now just 0.92%, according to this data.
Then there’s term deposits, where just over 60 lenders on the database have cut 12-month term deposit rates by an overall average of 0.53 percentage points, bringing the average rate down to 1.79%. Just this week lenders including National Australia Bank, Suncorp and Westpac reduced some of their term deposit rates.
But what does that all mean in real terms for the average Aussie’s savings account? The Canstar Research team crunched the numbers to see how much savings rates have suffered in the past 12 months.
They found someone who put $10,000 into a five-year term deposit in August last year could earn a total of $1,400 in interest at maturity in 2023, compared to the same term deposit taken out today which would earn you only $856 in interest by 2024 – that’s $544, or 39%, less.
They found that if you’d put $10,000 into a flexible online saver account in August 2018, in a month you’d have earned an average of about $8.67 in interest, but if you started now you’d only earn about $6.14 per month. Over the course of a year, that equates to about $104 interest in 2018, versus $74 in 2019. That’s down by 29%.
As for bonus saver accounts – where a bonus interest rate can be earned on top of the base rate for meeting certain conditions – $10,000 could have earned about $14.12 in interest a month on average this time last year, compared to about $10.93 now. That’s about $169 over a year in 2018, compared to $131 in 2019 – a drop of around 23%.
As rates on savings accounts continue to creep closer to zero, these comparisons might seem a bit grim, but it is possible to find rates of around 2% or higher. Below is a breakdown of the top five interest rates currently available for a deposit amount of $10,000 across different kinds of saving products.
What are the top flexible online savings account rates?
Flexible online savings accounts are those where no conditional bonus applies, but there still may be introductory (or promotional) rates available for limited-time offers. The below table excludes promotional offers though, and just lists current ongoing base rates, from Canstar’s database.
|Top 5 Flexible Online Savings Accounts|
|Bank of Sydney||BOS Saver||1.90%|
|MOVE Bank||Express Saver||1.70%|
|AMP Bank||Saver Account||1.65%|
|Easy Street Financial Services||Easy Savings Online Account||1.55%|
|Average rate for all products 2019||0.74%|
|Average rate for all products 2018||1.04%|
|Source: www.canstar.com.au as at 26-Aug-19. Based on the highest base rates available for flexible online savings accounts with a deposit amount of $10,000. Products listed in descending order according to rate. Flexible savings accounts are those where no conditional bonus applies. Promotional bonus rates excluded from table, however may be applicable. Products available exclusively to certain groups not included.|
What are the top bonus and promotional savings account rates?
The table below displays some of the highest online saver interest rates, including introductory and conditional bonus rates, for savings accounts on Canstar’s database at the time of writing.
|Top Bonus & Promo Saving Accounts|
|Company||Product||Total Rate||Bonus Interest Conditions||Promo Rate length||Base Rate (excl. bonus or after promo ends)|
|AMP Bank||Saver Account||2.75%||On balances up to $250,000||4 months||1.65%|
|Rabobank Australia||High Interest Savings Account||2.75%||On balances up to $250,000||4 months||1.30%|
|Macquarie Bank||Savings Account||2.65%||On balances up to $250,000||4 months||0.60%|
|HSBC||Serious Saver Account||2.60%||On balances up to $1,000,000||4 months||0.70%|
|MyState Bank||Bonus Saver||2.50%||Make 5 Visa Debit card transactions monthly; deposit $20+ into your bonus saver each month; bonus interest on balances up to $150,000||–||0.80%|
|Bankwest||TeleNet Saver||2.50%||On balances up to $2,500,000||4 months||0.50%|
|BOQ||Fast Track Saver*||2.50%||Deposit $1,000 + a month to your linked Day2Day Plus Account; on balances up to $250,000||–||0.35%|
|Average rate for all products 2019||1.56%|
|Average rate for all products 2018||1.95%|
|Source: www.canstar.com.au as at 26-Aug-19. Based on the highest base rates available for flexible online savings accounts with a deposit amount of $10,000. Products listed in descending order according to rate. Bonus savings accounts include those where a bonus rate applies when specified conditions are met. Average rate is calculated as base + bonus + promo rate of all savings accounts. *Fast Track Saver only for 25 + year olds; for 14-24 year olds refer to BOQ Fast Track Starter Account.|
What are the top 6-month term deposit rates?
The tables below display some of the highest term deposit rates on Canstar’s database at the time of writing, for a deposit amount of $10,000 and terms of six months, one year and five years respectively, with interest paid at maturity.
|Table 3: Top 5 6-month term deposit rates|
|Qudos Bank||Term Deposit||2.05%|
|Arab Bank Australia||Term Deposit||2.05%|
|Nexus Mutual||Classic Term Deposit||2.05%|
|Average rate for all products 2019||1.80%|
|Average rate for all products 2018||2.36%|
|Source: www.canstar.com.au 26-Aug-19. Based on a term deposit amount of $10,000 and a term of 6 months with interest paid at end of term.|
What are the top 12-month term deposit rates?
|Table 4: Top 5 12-month term deposit rates|
|Teachers Mutual Bank||Term Deposit I10||2.05%|
|Qudos Bank||Term Deposit||2.05%|
|UniBank||Term Deposit I10||2.05%|
|Average rate for all products 2019||1.77%|
|Average rate for all products 2018||2.50%|
|Source: www.canstar.com.au 26-Aug-19. Based on a term deposit amount of $10,000 and a term of 12 months with interest paid at end of term.|
What are the top 5-year term deposit rates?
|Table 5: Top 5 5-year term deposit rates|
|Greater Bank||Term Deposit||2.10%|
|G&C Mutual Bank||Term Deposit||2.00%|
|Australian Unity||Term Deposit||1.95%|
|Beyond Bank||Term Deposit||1.90%|
|Arab Bank Australia||Term Deposit||1.90%|
|Average rate for all products 2019||1.71%|
|Average rate for all products 2018||2.80%|
|Source: www.canstar.com.au 26-Aug-19. Based on a term deposit amount of $10,000 and a term of 5 years with interest paid at end of term.|