RBA rate cut: Where can you get a good deal on your savings?
With the official cash rate cut to a historic low 0.10%, you'll need to shop around if you want to earn a good interest rate on your savings.
The RBA has cut the official cash rate down to just 0.10%, which is the lowest it has ever been. This is great news if you've got a home loan as it means lenders are likely to reduce mortgage rates too (here are some lenders that already have).
But it's not the best news if you've got savings in the bank since it means the interest rates offered on savings accounts will likely also be cut. That said, there are a few savings accounts in the market that still offer decent interest rates in such a low-rate environment.
Where to get a good deal on your savings
If you're aged between 18 and 29, you can still earn up to 3.00% p.a. on your balance up to $30,000 with a Westpac Life savings account. You need to grow your savings by any amount each month and make five debit card purchases from a Westpac Choice everyday account each month too. This variable bonus rate of 3.00% p.a. is among the highest on offer in the market right now; however, it's only available if you're in the set age bracket.
If you don't qualify for the 3.00% p.a. rate with Westpac, another good deal in the current market is 1.50% p.a. with MyState Bank's Bonus Saver account. This bonus rate is available on balances up to $250,000, and you'll earn it each month you deposit at least $20 and make 5 or more Visa Debit card transactions from your linked MyState transaction account. A monthly deposit requirement of just $20 is really low for such a competitive, ongoing bonus rate.
Similarly, ING offers 1.50% p.a. on its Savings Maximiser account. However, this rate is only available on balances up to $100,000. Plus, you need to deposit $1,000 a month and make 5 or more Visa Debit card transactions from your linked ING Orange Everyday transaction account. You can, however, withdraw the $1,000 after depositing it and still be eligible for the bonus interest.
With rates low, are savings accounts still worth it?
There's no denying that the rates offered on savings account aren't what they used to be. However, despite lower rates, there are still several key benefits to having your money in a savings account.
Firstly, savings accounts are safe – much, much safer than investing in the share market. The government guarantees your deposit up to $250,000 with licensed Australian banks. So if anything were to happen to the bank, your money up to this amount is safe.
Savings accounts are also very easy, and quick, to access. If you need your money quickly for a large unexpected expense, you can access the money sitting in your savings account within seconds.
Lastly, your balance might not grow as quickly as it would with higher interest rates, but it still won't go backwards. Knowing that money is there and not going down is important if you're planning to use the money for something in the near future, like a house deposit, school fees or another large expense.
Not happy with your current savings rate? Compare savings accounts and consider switching to one with a higher rate or account conditions that suit you better.