No joy for savers as cash rates stay flat

SAVERS keeping cash in the bank are getting hit with rockbottom interest rates – some less than 1 per cent – making it hardly worthwhile to park cash in online “at-call” accounts.

The Reserve Bank of Australia has kept the cash rate at 1.5 per cent since August 2016 and while this has been a saviour for those paying debts, it has hurt the interest earnings of those with savings.

Latest analysis by financial comparison website RateCity found on $10,000 parked in an online savings account, the average maximum rate is 1.9 per cent and is only just keeping at the same level as inflation.

But the average base rate – the amount you earn without meeting any additional requirements – is 0.96 per cent.

This is based on $10,000 being held in the account without any additional deposits or withdrawals being made.

RateCity spokeswoman Sally Tindall said these rockbottom deals have resulted in a “crippling slog for savers who haven’t seen returns above 4 per cent for years.

“There are still a handful of accounts that will offer you relatively high interest, at rates of up to 3 per cent,’’ she said.

“However the harsh reality is most savings accounts can’t even match inflation, which is a worrying state of play.”

Hunting for a competitive savings account rate can also leave consumers confused by tricky terms and conditions.

These can include meeting certain deposit requirements, or being penalised if they make withdrawals.

Tribeca Financial chief executive officer Ryan Watson warned savers that “loyalty plays no part in obtaining a competitive interest rate. You simply must shop around on a regular basis,’’ he said.