SAVERS have already been hit by falling interest rates in the new year as returns on cash in the bank sink even lower.
While mortgage customers celebrate when there’s interest rate drops, for savers it’s the opposite.
Experts have urged deposit holders to review their rates as banks quietly reduce them, and more are expected to do the same in the coming months.
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Already this month financial comparison website Mozo has recorded drops by several banks including Bank Australia and Greater Bank (both down 0.15 percentage points) and ME Bank (down 0.5 percentage points).
Mozo spokeswoman Kirsty Lamont said savers should be reviewing the rates they received.
She said further drops could also be a sign the Reserve Bank of Australia will slash the official cash rate from its record low of 1.5 per cent.
“We’ve seen multiple providers reduce term deposit rates very quietly,” Ms Lamont said.
“For people who do like to invest money in term deposits it’s very likely you may not be aware that rates have gone down compared to where they were last year.”
For six month term deposit accounts Mozo’s database found the average rate was just 2.37 per cent while the lowest rate available was just a paltry 1.4 per cent.
She suggested savers lock away their cash sooner rather than later to get the best deal possible.
Twelve-month term deposit savers who invest $5000 could earn $150 in interest in a year, but the worst rate of just 1.4 per cent would deliver only $70.
Customers who have term deposits maturing soon should do a quick search online to find the best rates. It may involve jumping financial institutions.
Ms Lamont said people should be proactive and start reviewing rates a couple of weeks before the account matured.
Tribeca Financial chief executive officer Ryan Watson warned “loyalty doesn’t pay when it comes to term deposit rates”.
“Shopping around to find a competitive rate is the only way to ensure you are getting a good return,” he said.
“You most certainly can negotiate a better rate with your current bank. However, you will have to be armed with the better rates of their competitors.”
Mr Watson said while rates were so low savers needed to review how much money they planned on keeping in term deposits because there could be better alternatives to save their money.