Australians are saving more than they have in decades. According to data from the Australian Bureau of Statistics (ABS), the household savings ratio (the proportion of disposable income being put into savings) jumped to 19.8% in the June quarter, which is the highest it’s been since 1974. This was driven by a record fall in consumer spending, as well as increased government support payments due to COVID-19. But at the same time, the pandemic has also meant some Australians have had to dip into their savings, with millions of Australians applying for the early withdrawal of their superannuation.
Whether you’re looking to continue growing your savings or build them back up, in today’s low interest rate environment, it’s important to do your research to ensure you’re earning a competitive return. To help consumers who are looking for a safe place to grow their cash, Canstar has assessed 27 banks and 36 customer-owned institutions and named two winners of the 2020 Savings Award.
Canstar’s Savings Award recognises the institutions that provide the strongest combination of products across our Savings Account Star Ratings profiles, as well as excellence in products from the Term Deposit Award.
Canstar assesses products and providers based on both price and features, and considers a variety of consumer profiles in its research. When it comes to savings accounts, for instance, Canstar looks at ‘flexible savers’ who are looking to boost their savings while retaining the flexibility of being able to access their savings without impacting their interest rate, and ‘regular savers’ who are willing to meet stricter conditions to achieve bonus rates of interest.
In these economically uncertain times, keeping your money with a bank, credit union or other authorised deposit-taking institution (ADI) may also help provide some peace of mind. This is because Australians’ savings are guaranteed by the Federal Government up to $250,000 under the Financial Claims Scheme.
Bank of the Year – Savings – ME Bank
ME Bank has won the Bank of the Year – Savings Award. The Canstar Research team was particularly impressed by the bank’s term deposit offering. It found that ME Bank consistently offered significantly higher term deposit rates compared to the market average, based on the terms assessed (ranging from one month to five years) and on both historical average rates and current rates. At the time of writing, the bank offers term deposits with a minimum deposit of $5,000 and interest paid monthly, annually or at maturity (depending on the term).
Canstar Research also highlighted ME Bank’s flexible online savings account. The bank currently offers an online savings account with a 0.10% p.a. base rate, and a 1.45% p.a. bonus rate when you have a ME Bank Everyday Transaction Account and make at least four tap-and-go purchases per month using this account. Canstar Research noted that ME Bank customers have the flexibility to withdraw funds without losing access to the bonus interest rate.
Institution of the Year (Customer-Owned) – Savings – CUA
This is the sixth year in a row that Credit Union Australia (CUA) has been awarded the Customer-Owned Institution of the Year – Savings Award. Canstar Research recognised the strong performance of CUA’s savings products, noting they were suited to different types of savers, including flexible and regular savers.
At the time of writing, the credit union offers two savings account products: the eSaver Flexi Account and the eSaver Reward Account. CUA’s eSaver Flexi Account currently offers a 0.90% p.a. base interest rate with no bonus conditions. Its eSaver Reward Account currently offers a 0.05% p.a. base rate with a 1.40% p.a. bonus rate when you have a linked CUA Everyday Account and deposit at least $1,000 a month into the account.
Canstar Research also recognised the continued strong performance of CUA’s term deposits. At the time of writing, CUA offers term deposits ranging from one month to five years, with a minimum investment of $5,000 and interest paid monthly, annually or at maturity (depending on the selected term).
For more information about how Canstar’s Savings Awards are determined, view the methodology report.
Main image source: seamind224 (Shutterstock).