RECORD-low returns on cash in the bank are continuing to sting savers, who have now been forced to work extra hard to build a decent nest egg.
While a low cash rate at just 1.5 per cent may be good news for those paying down home loan debt, it’s the exact opposite for people needing to boost the hard-earned savings they have stashed in the bank.
New analysis by financial comparison website Finder.com.au found term deposit returns are delivering savers an average rate of just 2.45 per cent — the lowest on record with the Reserve Bank of Australia, which has been collecting that data since 2002.
The site’s spokeswoman Bessie Hassan said it was a particularly tough time for savers — particularly retirees — who rely on decent returns from their savings.
“Gone are the days where you get a better interest rate for committing to lock away your savings for an extended period,’’ she said.
“With term deposits you often have to pay a fee if you want to access your funds before the fixed term expires and with low interest rates they are becoming less competitive.”
For a six month term deposit the average interest rate is 2.05 per cent, while for 12 months it’s slightly higher at 2.3 per cent.
And for those who are comfortable with locking away their savings for three years they will get an average rate of 2.95 per cent.
RaboDirect’s head Bede Cronin said consumers should use comparison websites to view different deals and gauge if they can nab a more competitive rate.
“For existing customers who have an existing deposit that is coming up for maturity it’s extremely important that they take the time to prepare themselves in advance of that maturity,’’ he said.
“Find out how your incumbent bank will apply an interest rate at rollover because banks do things slightly differently.”
RaboDirect applies the same rate to existing customers at rollover that’s offered to new customers and an additional 10 basis points if the reinvest the total amount again.
FIXED RATES March 2017 March 2016 Difference
1 month 1.55% 1.95% down 0.4%
3 months 2% 2.3% down 0.3%
6 months 2.05% 2.25% down -0.2%
12 months 2.3% 2.4% down -0.1%
36 months 2.95% 2.65% up 0.3%
Originally published as Cash savers face record worst conditions