Interest rates paid on savings deposits have fallen way below the rate of resurgent inflation, leaving depositors actually losing money, in real terms, for securely keeping their cash in the bank.
“It’s tough for savers to obtain an interest rate that keeps pace with the rise in the cost of living,” says Mitchel Watson, general manager of research at Canstar. The negative 3.25 per cent real return is for bonus savings accounts, where an extra amount of interest is only paid if savers meet certain conditions. Those who fail to do so are paid a base rate which, on average, is just 0.05 per cent.Conditions vary, but common ones include needing to deposit a certain minimum amount of cash into an account each month, or not making any withdrawals.The highest paying bonus account on Canstar’s database is 1.35 per cent from Macquarie Bank.
“You can now find one-year term deposits that pay as much as 1.92 per cent, with the average of 0.63 per cent,” Watson says. “Last October, the average one-year term deposit was 0.46 per cent and the top rate was 0.85 per cent.”
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