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The Savings Accounts With the Best Interest Rates Right Now

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Lifehacker Australia
The Savings Accounts With the Best Interest Rates Right Now
Contributor: Mia Steiber
At Lifehacker, we independently select and write about stuff we love and think you'll like too. We have affiliate and advertising partnerships, which means we may collect a share of sales or other compensation from the links on this page. BTW – prices are accurate and items in stock at the time of posting.

The Reserve Bank of Australia (RBA) raised the national cash rate to 2.60 at its October 2022 meeting, slowing its pace by hiking just 25 basis points rather than 50. Some economists are forecasting that the RBA may have one or more rate rises left in the tank before it puts the cash rate on pause to assess its effect on Australia’s economy and inflation.

Following the rate hikes over recent months, interest rates of more than 4 per cent are becoming more common for savings accounts and term deposits, while it’s becoming harder to find home loans with rates below 4 per cent. As rising rates could change how Australians save, spend, and borrow money, it may be worth taking some time to assess your own household budget.

Can you still get a low-rate home loan?

This October, Australia’s major banks quickly announced when they would be passing the recent cash rate rise on to mortgage customers on variable interest rates. Of course, you may not start feeling the impact on your wallet for another month or more.

These rate hikes may also affect how much you can borrow, with the average person’s maximum borrowing capacity having dropped by approximately 20%, or $134,500, because of the previous five interest rate rises, according to RateCity research.

Borrowers at risk of mortgage stress may be able to consider refinancing with another lender offering a lower variable interest rate, provided you can fulfil the eligibility criteria (such as holding sufficient equity in your property):

Borrowers on fixed interest rates may be able to delay the bill shock until the expiry of their fixed rate period. As more of the ultra-low fixed rate offers from a couple of years ago come to an end, the more homeowners and property investors may start feeling the pinch.

It is still possible to lock in your mortgage rate to help keep your home loan repayments consistent, however some of the lowest fixed rates tend to be for shorter terms of one year:

How to grow your savings

Growing your savings may become easier thanks to the RBA cash rate hikes, with some savings accounts now offering some of the highest interest rates seen in years, particularly for young people.

Of course, there are also some caveats to consider. To qualify for some of the highest savings account interest rates, including those topping the 4 per cent mark, you may need to fulfil some fairly specific eligibility criteria, such as making regular deposits and no withdrawals. Others only offer the higher introductory rate for a few months before reverting to a lower savings rate. It’s important to compare savings accounts and seek out an option that can match your financial situation.

Term deposits may not be as flexible as some savings accounts, as you’re agreeing to lock away your savings for a fixed length of time in exchange for a predetermined interest return. But if you value security for your long-term savings goals, the right term deposit could prove very useful in the right circumstances.

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At Lifehacker, we independently select and write about stuff we love and think you'll like too. We have affiliate and advertising partnerships, which means we may collect a share of sales or other compensation from the links on this page. BTW – prices are accurate and items in stock at the time of posting.

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