The Telegraph reported on June 27 that Australians who keep cash in banks are reaping more benefits from stubbornly high inflation as banks have raised interest rates on savings accounts and term deposits.
Although the RBA has not raised interest rates for more than seven months, more banks have raised deposit rates than those that have cut rates. However, financial experts say Australians are still not doing enough to fight for higher deposit rates.
(Image source: The Telegraph)
Canstar, a research firm that monitors interest rate movements, reported that 31 banks have raised their deposit rates in the past month, while only six have cut them at least once.
Steve Mickenbecker, executive director of Canstar's financial services division, said banks are trying to attract more household deposits amid rising wholesale financing costs, so they are making their products more attractive.
He said this week's higher-than-expected inflation data could keep deposit rates higher for longer.
"Interest rate policy is a two-way drive, and it hits those who don't have long-term mortgages the hardest, but it's going to be much better for all savers and retirees living on fixed deposits."
Steve Mickenbecker (Credit: The Telegraph)
Mickenbecker said that the average deposit rate is gradually rising, and people should check their accounts against it.
"The best interest rate for a term account can be as high as 5.2%, but the average interest rate is still only 2.69%. You don't want to get just 2.5% interest, you're going to want to get more. ”
Bonus savings accounts have the highest interest rates, but they come with restrictions such as no withdrawals or the need to have a minimum monthly deposit.
Mickenbecker cautions: "You have to make sure that you meet these conditions every month, otherwise you will hardly receive interest." ”
Savers can also view and switch introductory rates that could last three to four months, but be aware that when the high rates end, "you're going to fall back to a very ordinary rate," he said.
Sally Tindall (Credit: The Telegraph)
Sally Tindall, head of research at RateCity, said there have been some recent developments in savings accounts, most notably the announcement by Ubank, a division of the National Bank (NAB), that it will increase the maximum incentive rate on its savings products to 5.5% from July 1.
"This puts pressure on other competitors," Tindall said. Three banks are currently trading at 5.5 per cent, reflecting fierce competition in the deposit market. ”
Financial markets are speculating that the probability of a rate hike by the RBA this year is close to 50%, a sharp jump from before the data on the annual inflation rate unexpectedly jumped to 4% was made public. However, some savers are still missing out on opportunities.
"Not every saver can benefit from a high interest rate environment because banks are still picking which accounts to offer competitive interest rates on," Tindall said. ”
In the case of Westpac, for example, its eSaver account offers a five-month introductory interest rate of 4.65 per cent for new customers, but after the introductory period, its standard floating rate is only 1.1 per cent, Tindall said, and savers should look for rates that start with "5", while understanding the specific terms and conditions of the account, and keeping track of the end of the account's high-interest rate preferential period.