Savers storing their money away in safer options such as these are now facing interest rates barely above the rate of inflation at below 2%.

Such interest rates would be welcomed by home buyers and investors, and these recent rate cuts have led to some home loan interest rates in the sub-3% region.

But these kinds of rates are not good for savers, who now have to look harder than ever for a good interest rate to earn a decent return on their cash.

After June’s cash rate cut – the first in nearly three years – a host of savings accounts that had previously offered rates of around 3% slashed rates by the full 25 basis points, sometimes by even more.

UBank, for example, cut the base interest rate on its USaver accounts by 27 basis points, but cut home loan rates by 25.

Term deposits have been hit by even bigger rate reductions, with the average term deposit rate across the majority of products in the market slipping to around 1.90% p.a..

This average was more than 2.30% p.a. just a few months ago.

average term deposit rates

Compared to their home loan rate cuts – often announced through emails to customers, media releases, and social media posts – many banks have been discreet about cutting savings account and term deposit rates.

Some even resorted to only publicising their cuts in the notices section of a print newspaper.

However, two of the big four banks – Commonwealth Bank and NAB – publicly announced they won’t be passing on the full 25 basis point rate cut to deposits and savings accounts in July.

“We have carefully considered how to respond to this latest official interest rate cut, given that it is not possible to pass on the full rate reduction to over $160 billion of our deposits, including deposits where interest rates are at or already near zero,” Angus Sullivan, Group Executive Retail Banking Services at Commbank said.

“We have made a deliberate choice to limit the interest rate reduction to 0.15% p.a. on our most popular savings account, NetBank Saver. We have also introduced a 5-month term deposit special of 2.20% p.a. together with an additional 0.10% p.a. bonus on this rate for existing CBA pensioner customers.”

NAB Chief Customer Office for Consumer Banking Mike Baird said NAB had considered customers who rely on deposits, such as farmers, retirees and those wanting to build their savings.

“For any changes to interest rates on savings accounts following today’s RBA cash rate announcement, NAB will not decrease rates by more than 19 basis points,” Mr Baird said.

“Decisions like these are difficult and reflect the current unique circumstances, with home loan rates at record lows at the same time as deposit and savings rates also being at record lows.”

Following the June and July rate cuts, these are some of the highest savings account rates available on the market at the moment.

Provider

000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
*Rate varies on savings amount
  • Deposit $500 per month to get bonus interest
  • 5.50% p.a. available on total savings up to $100k.
  • 5.00% p.a. applies to savings between $100k-250K.
  • Tiered bonus rates apply. (TMDs at ubank.com.au)
*Rate varies on savings amount

Save Account (>$100,000)

  • Deposit $500 per month to get bonus interest
  • 5.50% p.a. available on total savings up to $100k.
  • 5.00% p.a. applies to savings between $100k-250K.
  • Tiered bonus rates apply. (TMDs at ubank.com.au)
010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • Deposit at least $1,000+ each month from an external source
  • Make 5 or more eligible transactions
  • Grow your savings balance each month

Savings Maximiser (<$100k)

  • Deposit at least $1,000+ each month from an external source
  • Make 5 or more eligible transactions
  • Grow your savings balance each month
010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

Boost Saver

    Important Information and Comparison Rate Warning

    All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of July 20, 2024. View disclaimer.

    One-year depositors meanwhile can find rates as high as 2.50%.

    Provider

    Annually$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]5000$product[$field["value"]]$product[$field["value"]]More details
    A GREAT RATE FOR OVER 55s
    • If you are over 55 you can take advantage of special rates
    • $0 monthly account fee
    • Guaranteed rate of return
    A GREAT RATE FOR OVER 55s

    Term Deposit (Platinum Plus 55+) - 12 months

    • If you are over 55 you can take advantage of special rates
    • $0 monthly account fee
    • Guaranteed rate of return
    At Maturity, Monthly$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]2500031$product[$field["value"]]$product[$field["value"]]More details

    Term Deposit - 12 months

      At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]500007$product[$field["value"]]$product[$field["value"]]More details

      Wealth Builder Term Deposit - 12 months ($50,000+)

        At Maturity, Annually$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]2500031$product[$field["value"]]$product[$field["value"]]More details

        Term Deposit ($25k-$5m) - 12 months

          At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]10008$product[$field["value"]]$product[$field["value"]]More details

          Online Term Deposit - 12 months

            Annually, At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]100031$product[$field["value"]]$product[$field["value"]]More details

            Term Deposit ($1000-$500001) - 12 months

              Annually, At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]100031$product[$field["value"]]$product[$field["value"]]More details

              Term Deposit - 12 months

                At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]500031$product[$field["value"]]$product[$field["value"]]More details

                Term Deposit ($5k-$500k) - 12 months

                  At Maturity, Annually$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]500031$product[$field["value"]]$product[$field["value"]]More details

                  Term Deposit ($5k-$25k) - 12 months

                    At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]50001$product[$field["value"]]$product[$field["value"]]More details

                    Fixed Term Deposit - 12 Months ($500+)

                      At Maturity, Annually$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]5000$product[$field["value"]]$product[$field["value"]]More details
                      • Guaranteed rate of return
                      • Manage your term deposit online
                      • $0 monthly account fee

                      Term Deposit - 12 months

                      • Guaranteed rate of return
                      • Manage your term deposit online
                      • $0 monthly account fee
                      At Maturity, Monthly$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]2500031$product[$field["value"]]$product[$field["value"]]More details

                      Term Deposit - 12 months (Monthly)

                        Annually, At Maturity, Monthly$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]1000031$product[$field["value"]]$product[$field["value"]]More details

                        Term Deposit ($10000+) - 12 months

                          Annually, At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]100031$product[$field["value"]]$product[$field["value"]]More details

                          Term Deposit ($1000+) - 12 months

                            At Maturity, Annually$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]500000$product[$field["value"]]$product[$field["value"]]More details

                            Fixed Term Deposit ($500000+) - 12 months

                              Annually, At Maturity, Monthly$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]500031$product[$field["value"]]$product[$field["value"]]More details

                              Term Deposit ($5000+) - 12 month

                                At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]2000$product[$field["value"]]$product[$field["value"]]More details

                                Term Deposit Special - 12 months

                                  Annually, At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]100000031$product[$field["value"]]$product[$field["value"]]More details

                                  Term Deposit ($1,000,000-$2,000,000) - 12 months

                                    Annually, At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]10000031$product[$field["value"]]$product[$field["value"]]More details

                                    Term Deposit ($100000+) - 12 months

                                      Annually, At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]1000031$product[$field["value"]]$product[$field["value"]]More details

                                      Term Deposit - 12 months

                                        Important Information and Comparison Rate Warning

                                        All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of July 19, 2024. View disclaimer.

                                        “Stop screwing our senior citizens”

                                        The people most affected by the rate cuts to deposits and savings accounts are usually retirees and pensioners, as this demographic tends to be more risk-averse with their investments and reliant on interest for income.

                                        Since 2015, the cash rate has been reduced from 2.50% to 1%, yet there has been no change to the Government’s deeming rate over this time.

                                        The deeming rate is an assessment rate used by the Government to calculate a person’s aged pension. Instead of assessing their actual income, the government assumes the retiree is earning a set rate of return (the deeming rate) on financial assets including bank accounts, term deposits, shares and managed funds.

                                        The current deeming rates and thresholds are as follows:

                                        1.75% 3.25%
                                        Single Assets up to $51,800 Assets above $51,800
                                        Couple Assets up to $86,200 Assets above $86,200

                                        When a single person is deemed to be earning more than $52,686 per year, they are ineligible for the pension.

                                        In fact, for each fortnightly dollar of income “earned” above $174 per fortnight ($4,524 per year – the maximum you can earn to get the full pension), the pension reduces by 50 cents per fortnight. 

                                        According to Paul Rickard, Director of Switzer Financial Group, the lack of a change in the deeming rate is hurting the real incomes of thousands, if not hundreds of thousands of aged pensioners.

                                        “Because the deeming rate hasn’t kept pace with actual investment returns – that is, lowered in line with reductions in the cash rate – thousands of aged pensioners have suffered a decline in real incomes,” Mr Rickard wrote for Switzer Daily.

                                        “Some may be wondering why the Government hasn’t changed the deeming rate and here’s why…. from a Treasury perspective, changing the deeming rate costs money. Lots of money.

                                        “Hundreds of thousands of aged pensioners would become eligible for higher pensions, and thousands of others, who are currently ineligible, would become eligible for a part pension.”

                                        Mr Rickard urged the Government to “stop screwing our senior citizens”.

                                        “Age pension eligibility, and deeming in particular, are complex, and with a generous superannuation scheme and comfortable remuneration arrangements, something that most politicians are unlikely to personally experience,” he said.

                                        He also called for an immediate 0.5% point cut to the deeming rate and for the Government to tie the level of future deeming rates to the cash rate.