Banks slash savings rates while RBA sits tight: what Aussie savers need to know right now

While you might expect your savings account interest rate to only change when the Reserve Bank of Australia moves the official cash rate, the reality is quite different. Banks are cutting savings rates even as the RBA holds steady—and it's happening right now across major institutions.

The latest example? ANZ has just reduced interest rates by 0.10 per cent across three of its savings products, even though the RBA hasn't budged from its 4.35 per cent cash rate since August.

The bank will now offer a new maximum ongoing rate of 3.05 per cent on its Progress Saver, 4.15 per cent on its Plus Growth Saver, and 4.15 per cent on its Plus Progress Saver for the first $5,000 before reverting to 1.15 per cent. This means savers are earning less on their hard-earned money, despite no official rate change.

What actually happened with those rate cut predictions

Remember all that talk about a Melbourne Cup Day rate cut? A Melbourne Cup interest rate cut looks increasingly unlikely, despite the treasurer saying Australia has made ground on inflation. A hawkish turn from the Reserve Bank of Australia prompted analysts to push back their expectations for when the central bank will next cut rates.

The prediction didn't come to pass. One of the safest bets on Melbourne Cup Day is that the cash rate will likely stay at its current 4.35 per cent despite the considerable drop in quarterly CPI inflation announced last week. The Reserve Bank of Australia board is gathered in Sydney on Monday for its second last meeting of 2024 and due to hand down its decision on Tuesday afternoon.

Instead, economists no longer expect the RBA to cut the cash rate in December 2024. Instead, they pencil in February 2025 for a 25 bp rate decrease.

Banks are cutting rates anyway

Despite the RBA's steady hand, major banks are making their own moves. Along with ANZ's recent cuts, other big players have been adjusting their offerings. Three of the big four banks have changed savings rates in the last five weeks, showing how quickly the landscape is shifting.

• Bendigo Bank decreased its Reward Savers bonus rates by 5 basis points
• Westpac, St George, Bank of Melbourne, and Bank SA cut base rates by 0.15 per cent on bonus saver accounts but boosted the bonus rate by the same amount, meaning only customers who fail to meet monthly terms and conditions will see their returns fall
• IMB reduced bonus rates by 0.25 per cent on main savers accounts [ADDED]but lifted its introductory offer by the same margin for the first four months.
• However, NAB bucked the trend, lifting ongoing savings rates by 0.05 per cent—Reward Saver customers now earn 4.15 per cent if they meet monthly deposit criteria

As Tindall also noted, this is a 'timely reminder that banks can do what they want with their interest rates.'

The current savings landscape: what's actually available

Despite these cuts, there's still decent money to be made from savings accounts if you know where to look. Currently the highest bonus savings rate on our database is 5.00 per cent p.a. from Rabobank, Westpac and UBank, with conditions attached for the maximum rate.

Savers are being reminded they can still find rates above 4 per cent, provided they meet monthly criteria.

For those wanting simpler options, the top ongoing savings rate is 4.50 per cent p.a. from Border Bank and Police Bank's on balances with fewer hoops to jump through.

Why this matters more for seniors

If you're living on a fixed income or relying on savings to supplement your pension, these rate cuts hit harder than they might for younger savers still building wealth through wages. Every fraction of a percentage point counts when you're trying to keep up with rising costs.

The good news is that with rates up to 5.00 per cent, we round up the best high interest savings accounts on Canstar's database—you just need to know what to look for.

Reading the fine print has never mattered more

Canstar's Sally Tindall has a crucial warning for savers: 'All of the highest ongoing savings rates on the Canstar database come with strings attached in order to qualify for the maximum rate, from making a certain number of transactions, to growing your savings balance—even a single withdrawal can tank some savings rates.'

Simple options for those who want less hassle

The expert advice is clear: 'For those that long for a less complicated savings account, know there are still some offering ongoing rates over 4 per cent with no strings attached.'

The best no-conditions savings accounts offer one of the highest ongoing variable rates in the market for an account with no conditions to meet. These might have slightly lower rates than the bonus accounts, but they're perfect if you don't want to worry about meeting monthly requirements.

Your action plan: what to do right now

• Check your current rate: Log into your online banking and see exactly what you're earning. Many long-term customers are stuck on outdated rates.
• Compare your options: Use comparison websites like Canstar, Finder, or the government's MoneySmart site to see current market rates.
• Decide on conditions: Work out whether you can realistically meet monthly requirements for bonus rates, or if a simpler account suits your lifestyle better.
• Don't forget about credit unions: Some of the best rates come from smaller institutions like Teachers Mutual Bank or Police Bank.
• Read the product disclosure statement: Understand exactly what you're signing up for, including any fees or rate changes after introductory periods.

The bigger picture: what's coming next

According to market pricing, the cash rate is assumed to begin to decline around mid-2025, and to decline to around 3.5 per cent by the end of 2026. When that happens, savings rates will likely drop further—but competition between banks means there should still be decent options available for savvy savers.

The key is to stay informed and not just accept whatever rate your current bank is offering. With more than 250 savings accounts available in Australia, there's bound to be something better than what you have now.