July RBA rate cut: What to do with your savings
The RBA has cut the cash rate to a new record low of 1.00%, which is bad news for Australians with money in a savings account.
The RBA has again cut the cash rate today to a new record low of just 1.00%, down from 1.25% in June. The dust has barely settled from last month when the RBA cut the official cash rate for the first time in more than 30 months, bringing the rate down from the previous 1.50% to just 1.25%.
For anyone with a home loan this is likely good news. When the RBA cut the cash rate last month a lot of lenders passed on the rate cut, either in full or in part, to their customers with home loans meaning the amount customers are charged in interest is reduced.
But if you're one of the hundreds of thousands of Australians with money sitting in a savings account, it's not so great. Following last month's RBA rate cut, a huge number of banks reduced the interest rate on their savings products by 25 basis points in line with the RBA's cut (and some banks even cut the rate by more than this!). The table below shows the major banks that slashed their savings rates in June, as a direct result of the RBA's cash rate cut.
Savings account rate cuts in June 2019 following the RBA rate cut
|Account name||Old max rate (base + bonus)||New max rate (base + bonus)||Change|
|ING Savings Maximiser||2.80% p.a.||2.55% p.a.||-0.25|
|UBank USaver||2.87% p.a.||2.60% p.a.||-0.27|
|ME Online Savings Account||2.85% p.a.||2.60% p.a.||-0.25|
|RAMS Saver||2.80% p.a.||2.55% p.a.||-0.25|
|Bankwest Hero Saver||2.60% p.a.||2.35% p.a.||-0.25|
|HSBC Serious Saver||3.10% p.a.||2.85% p.a.||-0.25|
|AMP Saver||3.00% p.a.||2.75% p.a.||-0.25|
|Suncorp Growth Saver||2.60% p.a.||2.30% p.a.||-0.3|
|CommBank NetBank Saver||2.51% p.a.||2.20% p.a.||-0.31|
|St.George Maxi Saver||2.70% p.a.||2.45% p.a.||-0.25|
|Bank of Melbourne Maxi Saver||2.70% p.a.||2.45% p.a.||-0.25|
|BankSA Maxi Saver||2.70% p.a.||2.45% p.a.||-0.25|
|ANZ Progress Saver||2.40% p.a.||2.20% p.a.||-0.2|
|NAB iSaver||2.55% p.a.||2.30% p.a.||-0.25|
What to do with your savings following today's rate cut
I hate to be the bearer of bad news but if this month is anything like last month, we can expect to see further cuts to savings rates. Lenders will be under pressure to pass on the rate cut to their home loan customers, and if they do cut their mortgage rates they'll need to make up for this elsewhere, with saving accounts and term deposits the obvious choice.
If you've got your money sitting in a savings account, make sure you keep a close eye on the interest rate. If your bank does drop the interest rate (you'll usually get an email from your bank telling you about the change in rate), consider comparing your options and switching to an account that offers more interest. You can compare current savings account rates in our comparison table.