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The Reserve Bank of Australia (RBA) has made its third consecutive rate hike, raising the official cash rate by 50 basis points to 1.35%. Home loan borrowers are now likely to face increased repayments, but it’s not all doom and gloom for savers.
Why is a cash rate increase good for savers?
When the RBA raises the cash rate, banks and financial institutions often choose to raise interest rates on their savings accounts and term deposits. This means customers can earn more interest on their deposits.
Following the May and June cash rate hikes, 79% of authorised deposit-taking institutions (ADIs) on Canstar’s database increased their savings account interest rates. For instance, the highest ongoing base rate before the May cash rate rise was 0.45%. It has since risen by 0.66 percentage points to reach 1.10% by the time of July’s cash rate hike.
For term deposits, we’ve seen 89% of providers on our database increase at least one personal term deposit rate since the May cash rate rise. For example, the highest 1-year term deposit rate was previously 2.30% and it has now increased by 0.85 percentage points to 3.15%.
How have the big four banks responded?
Commonwealth Bank
Commonwealth Bank announced it will pass on the cash rate increase in full to its GoalSaver and YouthSaver accounts. The GoalSaver rate will increase to 1.25% including bonus interest, while the YouthSaver rate will increase to 1.45% including bonus interest.
Commonwealth Bank will also introduce a new 15-month term deposit special offer of 2.50%.
The changes will come into effect on 15 July 2022.
NAB
NAB is increasing its Reward Saver account by the full 0.50 percentage points, taking the total rate to 1.00%.
NAB is also increasing its 12-month Term Deposit rate to 2.50%.
The changes will come into effect on 15 July 2022.
ANZ
ANZ will pass on the cash rate increase in full to its Progress Saver bonus interest rate and ANZ Plus interest rate. The Progress Saver rate will increase to 1.15% including bonus interest. The ANZ Plus rate, part of ANZ’s digital banking service, will increase to 2.00%. The changes will come into effect on 15 July 2022.
ANZ will also introduce a new 2.50% interest rate on its 11-month Advance Notice term from 11 July 2022.
Westpac
Westpac will increase the base rate on its Westpac Life savings account by 0.50 percentage points from 22 July, taking the total rate to 1.35% for customers who meet the bonus interest conditions.
Westpac has also announced a new term deposit rate of 2.50% for terms of 12 to 23 months, available from 8 July.
When will savings rates increase?
Banks have been slower to pass on the last two cash rate increases to savers than to home loan borrowers, Canstar finance expert Steve Mickenbecker noted, with one in five banks yet to increase savings rates at all since the May cash rate increase.
“Increases to savings interest rates have been patchy, with many banks lifting one savings account rate but not another, or passing on the increase through promotional rates that don’t flow through to existing savers,” Mr Mickenbecker said.
How much will my savings increase by?
It’s at the discretion of your bank. Following the June cash rate increase, 29% of providers on Canstar’s database passed on the full 50 basis point increase to savings accounts, while 16% of providers passed on a partial increase.
What if my bank doesn’t increase my savings rate?
Not every bank and financial institution will increase their savings rates. So if you want to score a higher interest rate, now could be a good time to compare what’s on offer.
“Better savings rates are emerging and are worth hunting down, but savers need to be aware of what they are signing up for,” Mr Mickenbecker warned.
“To qualify for introductory promotions or bonus rates, savers may need to tailor their banking patterns to meet the requirements and conditions.”
Highest savings account interest rates on Canstar’s database
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| Current rate | Promotional/bonus rate conditions | |
|---|---|---|
| BOQ Future Saver (14-35 year olds) |
3.00% 0.05% base and 2.95% bonus rate |
Deposit $1,000 and make 5 eligible transactions from a linked Everyday account each month. Balances up to $50k. |
| Westpac Life (18-29 year olds) |
2.50% 0.15% base and 2.35% bonus rate |
Grow savings balance and make 5 eligible purchases with linked debit card each month. Balances up to $30k. |
| Great Southern Bank Goal Saver |
2.15% 0.10% base and 2.05% bonus rate |
Deposit $500 to Everyday Edge account and make 5 card purchases. Balances up to $50k. |
| Citi Online Saver |
2.10% 1.10% base and 1.00% promo rate |
Promotional rate for first 4 months. Balances up to $500k. |
| Rabobank Australia High Interest Savings Account |
2.10% 1.00% base and 1.10% promo rate |
Promotional rate for first 4 months. Balances up to $250k. |
| ING Savings Maximiser |
2.10% 0.05% base and 2.05% bonus rate |
Deposit $1,000 to any personal ING accounts, make at least 5 eligible ING card purchases and grow savings balance each month. Balances up to $100k. |
Source: www.canstar.com.au – 8/07/2022. Based on savings accounts available to adults on Canstar’s database, with rates based on a deposit balance of $10,000. Top 5 selected and table sorted in descending order by total rate, followed by base rate.
If you are happy to lock away your money for a period of time, you could also consider taking out a term deposit.
“Term deposit deposit rates are becoming more generous, particularly for terms of two years and beyond,” Mr Mickenbecker said.
“Savers need to consider whether they are comfortable tying their money up for a longer term in an environment of rising interest rates.”
Highest 24-month term deposit interest rates on Canstar’s database
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| Interest rate | Interest paid | |
|---|---|---|
| AMP Bank | 3.65% | Annually |
| Judo Bank | 3.64% | End of term |
| Great Southern Bank | 3.40% | End of term |
| MyState Bank | 3.35% | End of term or annually |
| Credit Union SA | 3.30% | End of term |
| Citi | 3.30% | Annually |
| ING | 3.30% | Annually |
| Macquarie | 3.30% | Annually |
Source: www.canstar.com.au – 8/07/2022. Based on term deposits available on Canstar’s database, with rates based on a deposit balance of $50,000. Top 5 providers selected and displayed based on their highest interest rate. One rate shown per provider. Table sorted in descending order by interest rate.
What other banks have increased their savings rates?
When other providers on Canstar’s database announce increases to their savings account interest rates following the July cash rate hike, we’ll provide details below. T&Cs apply so be sure to check with the individual provider for further details.
Bank of Melbourne, BankSA and St.George
Bank of Melbourne, BankSA and St.George will be increasing the base rate by 0.50 percentage points and bonus rate by 0.05 percentage points on their Incentive Saver accounts, bringing the total rate to 1.55%. This will be effective from 22 July 2022.
From 8 July 2022, they will also introduce a new Term Deposit offer of 2.50% for terms between 12 and 23 months. The rate will be available on request.
Bankwest
Bankwest will increase its Easy Saver by 0.50 percentage points, taking the total rate to 1.35% for balances up to $50,000. The change will come into effect on 15 July 2022.
Bendigo and Adelaide Bank
Bendigo and Adelaide Bank will increase the Reward Saver account by 0.60 percentage points, bringing the total rate to 1.85% for customers 30 years and under, and 1.55% for customers 31 years and over. The change will be effective 27 July 2022.
ING
ING will be increasing its Savings Maximiser bonus rate by the full 0.50 percentage points, taking the total rate to 2.60% for customers that meet the monthly criteria.
It will also be increasing its Savings Accelerator by 0.50 percentage points for balances $50,000 and over, and 0.15 percentage points for balances under $50,000. This will bring the total rate to 0.50% for balances under $50,000, 1.40% for balances between $50,000 and $149,999.99, and 1.70% for balances $150,000 and over. The changes will be effective from 12 July 2022.
ING has also increased some term deposit rates, including increasing its 1-year term deposits to 3.00% and 2-year term deposits to 3.30%.
Macquarie Bank
Macquarie will increase its Transaction Account interest rate and Savings Account ongoing rate by 0.25 percentage points for balances up to $250,000. This will take both interest rates to 1.75%. The changes will be effective from 14 July 2022.
Macquarie will also increase its Savings Account bonus welcome rate by 0.20 percentage points for balances up to $250,000, taking it to 2.00% for the first four months. This will be effective from 8 July 2022.
Lastly, Macquarie has increased its six-month term deposit interest rate to 2.40% and one-year term deposit rate to 3.25%. These changes are effective from 6 July 2022.
ME Bank
ME Bank will increase its Online Savings Account by 0.50 percentage points to 1.60% when eligibility criteria is met from 15 July 2022.
MyState Bank
MyState Bank will increase its Bonus Saver account by the full 0.50 percentage points, taking the total rate to 2.1% when eligibility criteria is met. The change is effective 18 July 2022.
Suncorp
Suncorp will increase its Growth Saver account by 0.70 percentage points, taking the total rate to 2.00%. It’s 18-month carded term deposit will increase by 0.55 percentage points to 3%. The changes will be effective 13 July 2022.
ubank
ubank is increasing the bonus interest rate on its Save and USave accounts by 0.50 percentage points to 2.25%. The total interest rate will be 2.35%. The change will come into effect on 1 August 2022.
Virgin Money
Virgin Money will increase its Boost Saver by 0.80 percentage points to 2.30%, and its Grow Saver by 0.50 percentage points to 1.50%. The rates will come into effect on 15 July 2022.
This content was reviewed by Sub Editor Tom Letts as part of our fact-checking process.
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