Popular savings account defies trend and INCREASES interest rate

Posted: 5 May 2021 8:30 am
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After 12 months of nothing but cuts to savings accounts, this bank has just increased the rate on its bonus saver account. Will more banks follow?

Over the last year it's safe to say that pretty much every bank has made a cut (or often several cuts) to its savings account rate. This has been a direct result of the historically-low cash rate and also record-low mortgage rates below 2.00% p.a.

However, MyState Bank has today gone against this trend and increased the interest rate on its popular Bonus Saver Account up to 1.20% p.a. The MyState Bonus Saver is now one of the most-competitive rates available in the market. As we're still in an incredibly low-rate environment, an interest rate above 1.00% p.a. is quite good at the moment.

Another benefit of this rate increase is that MyState didn't change the account conditions you're required to meet to earn the bonus rate. To earn the 1.20% bonus rate all you need to do is deposit just $20 a month and make 5+ debit card transactions. Compared to other bonus savers these conditions are very easy to meet.

How does the MyState Bonus Saver compare?

The newly-launched AMP Saver account offers a total bonus rate of 1.25% p.a., only slightly high than MyState's new rate. To earn this rate with AMP you only need to deposit $250 a month, with no spending requirements to meet. This deposit condition is higher than MyState's, but still a lot lower than many other accounts in the market.

MyState's new bonus rate is in line with the new Virgin Money Boost Saver account at 1.20% p.a. However, it's much easier to earn the bonus rate with MyState or AMP. With Virgin Money, you need to deposit $2000 a month (or $1000 if you're between 18-24) and make 5 transactions a month.

If you're under 30, the Westpac Life savings account still offers the best rate by far at 3.00% p.a. for customers aged 18-29. You need to grow your balance (by any amount) and make 5+ transactions each month from your linked Westpac bank account. While this rate is significantly higher than MyState's new rate, it's only available on balances up to $30,000. So even if you're under 30, you could be better off with a different account of you've got a balance larger than this.

Will more banks follow and raise their savings rates?

We can't say yet whether more banks will increase their savings account rates, however it is looking more likely. In the past few months we've seen new savings account offers hit the market, like AMP and Virgin Money, so it does look like a trend is starting to emerge.

Interestingly, several major banks have started to lift their fixed mortgage rates which could point to some more savings rate rises too. However, the RBA has made it clear that it'll keep the cash rate very low for at least another year (and a low cash rate almost certainly means low savings rates).

If you haven't checked your savings account rate in a while, it might be time to switch. Compare high interest saving accounts and switch to one that can help you earn more interest on your money.

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