Will savings account interest rates go up in 2022?
One bank has already raised the bonus interest rate on its savings account, and more banks could do the same throughout the year.
The interest rates on savings accounts have been at record lows for almost 2 years now. Let's take a look at why interest rates are so low, if they'll be going up any time soon and some of the best rates available at the moment.
Why are savings account interest rates so low?
There are a few reasons why, but the main one is due to the official cash rate.
After a series of cuts to the rate over the past 2 years, the RBA's cash rate is also at a historic low of just 0.10%. With the cash rate so low, mortgage rates have also been low, which is great news for home owners as it means less interest to repay (for now). But it hasn't been great news for people with money in the bank looking to earn a return on their deposit.
Because banks and lenders are earning less interest from mortgages, they can't pay out as much to customers in the form of interest on their deposits. It's a balancing act for the banks.
Will savings account interest rates go up this year?
While no one knows for sure when (or if) saving account interest rates will finally start to climb again, it is likely that we'll see some banks lift their rates this year. AMP has already increased the total bonus interest rate on its AMP Saver Account from 1.16% p.a. to 1.35% p.a. this month (the new 1.35% p.a. rate will come into place from 1 February).
While the RBA hasn't said whether or not it will increase the cash rate this year, we've started to see banks increase their home loan rates anyway. There's no guarantee that a bank will increase its savings interest rates as it increases its home loan rates, but it is an early indication that it might do so.
However, any increases to savings account interest rates that we do see are likely to be quite minor, so don't expect to earn much more than 3% p.a. on your savings for a while yet (sorry!).
What are the best savings account rates at the moment?
If you're 18-29 you can earn 2.50% p.a. with a Westpac Life savings account, on balances under $30,000. You need to grow your balance each month, make sure your balance stays above $0 and make 5+ debit card purchases from your linked Westpac Choice transaction account each month.
In line with the AMP Saver, the ING Savings Maximiser also offers a bonus rate of 1.35% p.a. when the conditions are met. To get the bonus rate you need to deposit at least $1,000 a month, make 5+ card purchases and grow your Savings Maximiser balance (excluding interest earned). The AMP Saver bonus rate is a bit easier to earn, you just need to grow your savings by $250 each month.
The Virgin Money Boost account offers 1.20% p.a. when you deposit at least $2,000 each month (or $1,000 if you're under 25) and make at least 5 transactions from the account in the previous month.
Want to earn more interest on your money this year? Compare high interest savings accounts and switch to an account with a better rate.