Savings account interest rate cuts
Here's a full list of confirmed savings account rate cuts, plus how a lower interest rate will affect your savings balance.
Key takeaways
- When the RBA cuts the cash rate, banks respond by cutting the rates on their home loans, savings accounts and term deposits.
- The RBA has cut the cash rate twice in 2025 so far - by 25 basis points in February and another 25 basis points in May.
- Economists are predicting multiple cuts to the cash rate in 2025. This could cost the average Australian saver hundreds of dollars per year in lost interest earnings.
Why are savings account interest rates falling?
The RBA has cut the cash rate agin in May 2025, from 4.10% to 3.85%. This is following the previous 25 basis point rate cut in February.
This is in response to the latest inflation figures which show that inflation is going back down towards the RBA's target range.
When the RBA makes a cut to the cash rate, banks are under pressure to cut their home loan rates by the same amount, savings borrowers money on their loans.
With banks bringing in less money from mortgages, they tend to make up the difference by paying out less money on their interest-earning deposit products like savings accounts and term deposits.
How interest rate cuts will affect your savings balance
If you earn interest via a high interest savings account, a lower cash rate is bad news. The amount of interest you earn will almost certainly drop.
The impact on your savings will depend on the size of your balance and what interest rate you're getting. According to Finder data, the average Australian has around $32,000 in cash savings. Let's assume you're depositing $500 a month and you've were getting one of the highest rates on offer at 5.50% p.a. (before the first rate cut in February).
Here are some examples with different savings account balances based on a drop of 50 basis points (in line with how much the RBA has cut the cash rate so far in 2025).
We've used a savings rate of 5.50% p.a. as the starting rate and assume you've maintained a monthly deposit of $500.
| Savings balance | Interest earned at 5.50% (annual) | Interest earned at 5.00% (annual) | Difference |
|---|---|---|---|
| $20,000 | $1,282 | $1,163 | $119 less |
| $40,000 | $2,409 | $2,186 | $223 less |
| $60,000 | $3,538 | $3,209 | $329 less |
| $80,000 | $4,666 | $4,232 | $434 less |
Will all banks drop their savings account rates?
While banks use the official cash rate set by the RBA to guide their own interest rates, ultimately they can choose what interest rate to offer savers.
Banks are not obligated to cut their savings rates in line with the RBA's cash rate cuts. This means some banks might not cut their savings rates at all, and some might cut their rates even more than what the RBA has.
Banks might also wait a few weeks (or longer) after the RBA announces a cut to the cash rate to make changes to their savings acount rates - it's not always done on the same day.
What to do with your savings
The best way to ensure you're always getting as much interest on your savings as possible is to compare accounts often. Economists are predicting several rate cuts throughout 2025, which means we can expect savings account rates to be constantly shifting.
Current high interest savings account rates
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How we picked theseHow the Finder Score helps you find a better savings account
The Finder Score is a simple score out of 10. The higher a savings account's score, the better we think it is for the average customer.
We score each savings account in our database of hundreds based on a data-driven methodology with 2 main criteria: Does the account offer a high interest rate? And is it easy for savers to actually earn that rate?
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