Interest rates: Why the bank is a better place for your savings than shares in 2023

A bank account is shaping up to be the best place to save this year, and even some of the worst Big Four accounts outperform the stock market.

ING’s Savings Maximiser will have Australia’s highest savings rate of 4.8 per cent when the annual rate rises by 0.25 percentage point on Valentine’s Day, February 14.

Unlike the big four banks, RateCity research director Sally Tindall said ING had been more consistent in raising its savings rates in line with increases in the Reserve Bank of Australia’s cash rate.

“Over the last six months, ING has been one of the most consistent players when it comes to passing rate hikes on to its savings clients,” he said.

The Commonwealth Bank, Westpac, ANZ and NAB are raising their savings rates this month after the RBA this month raised the cash rate by a quarter of a percentage point to a new 10-year high of 3.35 percent.

But none of the Big Four are in the top five for best rates for savings accounts, with some products paying interest well below the RBA’s cash rate.

‘The big banks cannot help themselves. They are willing to boost one account, but only at the expense of another. It is a practice that is unlikely to stop unless customers start voting with their feet by switching,” said Ms Tindall.

Still, even some of the meaner big bank products offer better savings rates than the 2% annual growth rate of the stock market, but savers have better options.

After ING, Bank of Queensland has the next highest savings rate of 4.75 per cent for its Future Saver account for clients aged 14-35.

ING’s Valentine’s Day Savings Maximiser will have Australia’s highest savings rate of 4.8 per cent when the annual rate rises by 0.25 percentage point on February 14 (pictured is an ING office in Brussels)

Virgin’s Money Boost offers 4.6 percent interest with a $2,000 deposit and five purchases in a linked bank account.

MOVE Bank offers 4.5 percent interest on a $200 deposit but no withdrawals.

Macquarie Bank offers 4.5 percent for the first four months, and the base rate component of its savings account increased from 3.7 percent to 3.8 percent effective February 22.

Rabobank Australia has a rate of 4.5 percent for four months, based on a 3.25 percent base rate on its high-interest savings account.

Newcastle Permanente has a rate of 4.5 percent for three months, but the base rate on your online savings account is just 1 percent.

Westpac was the only major bank to offer a savings rate of more than 4 percent, and Westpac offered 4.35 percent for people ages 18 to 29 on its Spend&Save product.

Westpac will also pay 4 percent interest on its Life product starting February 21, with rates increasing by 0.25 percentage points.

Commonwealth Bank, Australia’s largest mortgage lender, will pay 4 per cent interest on its Goalsaver and Youthsaver accounts from February 10.

Rates on these accounts are increasing by 0.75 percentage points and 0.5 percentage points, respectively.

NAB will also have a 4 percent rate for its Reward Saver, and its total bonus rate will increase by 0.75 percentage points starting February 17.

National Australia Bank’s iSaver pays 4 percent interest for the first four months, but then reverts to a low savings rate of 1.35 percent.

ANZ’s Plus Save account is rising by 0.25 percentage point to 4 percent since February 14.

But the Progress Saver product remains at 2.5 percent.

This low rate, however, has still outperformed the stock market.

The S&P/ASX200 on the Australian Stock Exchange has risen 2 percent over the past year as interest rate hikes discouraged investors.

Inflation last year rose to 7.8 percent, the steepest pace since 1990 and well above the RBA’s target of 2 to 3 percent.

Unlike the Big Four banks, RateCity’s research director Sally Tindall (pictured) said ING had been more consistent in raising its savings rates in line with increases in the Bank’s cash rate. Australian reserve.

The RBA believes that inflation has peaked and is expected to moderate to 4.75 percent by the end of 2023.

The Commonwealth Bank, Westpac and ANZ all expect the RBA to hike rates two more times by April or May, taking the cash rate to a new 11-year high of 3.85 percent.

The Reserve Bank expects inflation to moderate to 4.75 percent by the end of 2023.

Ms Tindall said bank savings rates would outperform inflation by Christmas.

“If the Reserve Bank issues at least two more cash rate hikes and inflation comes down again, as expected, we could see higher savings rates outpace inflation within the year,” he said.