Millions of Australians have been kept in the dark about how much interest they’ll earn on their savings following the Reserve Bank’s cash rate cut yesterday.
Within minutes of the RBA handing down a 25-basis-point cut, all of the big four banks announced they would be passing on the relief to variable home loan customers between May 30 and June 3.
However, only Westpac revealed what changes it would make to its savings rates, with ANZ, NAB and Commonwealth Bank all remaining tight-lipped on that front, even though all are expected to follow suit and cut deposit rates.
READ MORE: ‘Double-edged sword’: What interest rate cut may mean for house prices
“If history is anything to go by, most savings rates will be getting a haircut over the next few weeks,” Canstar data insights director Sally Tindall said.
“While this announcement from Westpac will be disappointing news for many of its savings customers, at least the bank has been upfront in letting them know exactly what their savings rates will soon be.
“The other big banks should take a leaf out of Westpac’s book and let their savings customers know the fate of their interest rates.”
Australian households currently have a record $1.6 trillion in savings accounts as of March, according to ARPRA data – up $8.3 billion from February and more than $125 billion from the same time last year.
READ MORE: Big four banks to pass on interest rate cut to homeowners
However, many of the millions of Australian customers who hold savings accounts are effectively losing money due to declining interest rates on offer for both accounts and term deposits.
“With interest rates on online savings accounts now typically returning around 1.5 per cent, and interest rates on term deposits across all maturities averaging just 3.1 per cent in April 2025, that exposes many savers to very low returns, potentially falling below zero given inflation of 2.4 per cent,” Vado Private director Mark Zukerman said.
“While inflation is expected to settle around the middle of the RBA’s 2-3 per cent target range, the RBA said that it expects the CPI to increase for a short period when cost-of-living support measures end.
“That will work to lower the real returns on cash investments.
“Returns on bank online savings accounts averaged just 1.55 per cent in April 2025, while the best cash investors could get from a one-year term deposit was around 4 per cent, and around 3.2 per cent for a three-year term, new data from the RBA shows.
READ MORE: Millions of home owners holding out for more interest rate cuts: survey
“Those are not attractive returns.”
They’re expected to get even worse, too, with markets expecting another cut from the RBA by August and at least two more by February, which would bring the official cash rate down to 3.10 per cent.
“The May cash rate cut might be a reason to pop the champagne for mortgage customers, however, for savers, it’s likely to go down like a lead balloon,” Tindall said.
“Cash rate cuts are always bittersweet…
“In the case of the banks still to announce savings rates – which is currently the vast majority – no news is not necessarily good news. You can expect these rates to fall over the next two to three weeks.
“While there are still savings rates starting with a ‘5’, at this point we’re clinging on to them for dear life.”
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