Which banks offer RBA’s ideal 4.5pc savings rate?

RBA governor Philip Lowe wants Aussies to stop hoarding $100 bills under their beds and shop around for a 4.5 per cent or more savings interest rate – here’s a list of those that pass the sniff test.

Few banks are offering Aussies savings rates of 4.5 per cent or more. Picture: Emma Brasier.

Just 24 savings accounts – out of a list of up to 300 offerings – meet RBA governor Philip Lowe’s sniff test on reasonable returns, an analysis by research and comparison group RateCity.com.au shows.

Westpac is the only big four bank to feature on the list with its Spend&Save account offer of 4.7 per cent, but only for those aged from 18-24 years.

Of the two dozen offerings from 19 banks, 15 accounts are targeted at all adults, five are for young adults only and four for kids.

At its monetary policy meeting on Tuesday, the Reserve Bank paused the official cash rate at 3.6 per cent – following 10 rate hikes since May 2022.

The battle to control sky-high inflation has resulted in households fighting cost of living rises along with a growing debt burden.

The RBA’s latest Financial Stability Review, released on Thursday, warned four in ten households have less than a three-month buffer in mortgage repayments, and a small group of borrowers could fail to meet their repayments.

In his address to the National Press Club a day after the rate hike, Dr Lowe signalled more rate rises were not being ruled out with Australia experiencing its “highest inflation rate in 30 years, the lowest unemployment rate in 50 years, and it’s still two years before we’re getting inflation back to the top of the target range (of between 2 and 3 per cent)”.

And while most banks have passed on the rate hikes in full to homeowners, deposit rates have failed to rise by as much.

Many savings accounts are “still trailing a long way behind”.

At the Press Club event, in response to a question on Australians continuing to hoard $100 bills, Dr Lowe said the rate of circulation had dropped, partly due to higher interest rates, but also signalled lower deposit rates were to blame.

“If people get 4.5 per cent on their transaction deposit – and if you are not getting it, I encourage you to look around for a bank that will give that to you – that incentive of holding $100 bills at home, under your bed, is less,” he said.

See the full list below:

Ratecity.com.au research director Sally Tindall said after 10 RBA hikes, many savings accounts are “still trailing a long way behind”.

Big four online saver accounts still have ongoing rates ranging from 1.10 per cent to 1.85 per cent.

“Governor Lowe has set a very reasonable savings benchmark, yet the vast majority of accounts aren’t even close to clearing this.

“Just one account from a big four bank passes Governor Lowe’s savings rate sniff test, while many of the others aren’t even within cooee of it,” she said.

She urged customers to use the long weekend to research competition rates.

“Half an hour of research on Easter Monday could end up being a highly profitable use of your time – even at public holiday rates,” Ms Tindall said.

“There are millions of big four bank online savings customers out there earning less than 2 per cent on their nest eggs. That’s nowhere near good enough,” she said.