Australians are managing to stow more money in the bank to weather cost-of-living woes, but many people aren’t getting the best bang for their buck when it comes to savings rates.

A record $1.47 trillion is sitting in Australian bank accounts, according to the latest figures from the Reserve Bank, with household deposits up more than $200 billion since the Reserve Bank first started hiking interest rates in April 2022.

But RateCity research director Sally Tindall says many households aren’t getting as much from their savings as they could.

“There’s a divergence in what constitutes a competitive savings rate and what is a lacklustre one,” Tindall said.

“That often comes down to understanding your savings goals and making sure you pick the right one for your finances.”

Holding pattern

Tindall said that with the official cash rate being in an extended pause, banks have adopted somewhat of a holding pattern strategy with savings rates recently, with fewer changes than last year.

But while banks are “holding onto their rates” households should do the opposite and be vigilant about finding the best deal available.

That’s because there’s a big difference between what popular saving accounts pay and the best on the market, especially with big banks.

For example, existing customers with a Westpac online savings account are earning just 1.1 per cent after their introductory period.

Commonwealth Bank is offering just 2.35 per cent to online savers.

By comparison, Australians can earn close to or even slightly more than 5 per cent with market leading saving accounts that also carry no extra terms and conditions.

And those willing and able to jump through a few extra hoops can earn even more, with ME Bank and ING offering about 5.5 per cent with deposit and transaction requirements in place.

“There are some pretty healthy savings products out there that have high over 5 per cent ongoing rates, but only if you meet those terms and conditions,” Tindall said.

“Some of them catch you out with other criteria too, such as balance caps … there’s a lot of complicated fine print that’s specific to each and every account.”

Meet the T&Cs

With that in mind, the golden rule is to ensure you’re able to meet any requirements or thresholds before signing up to a new account.

But don’t overcomplicate it either; in some cases – like ING – simply making them your primary bank for your wages and daily spending will satisfy most of the terms and conditions required.

Tindall said Australians should keep in mind that banks often do change the conditions on their savings accounts, so you need to pay attention to ensure you’re doing what’s required to get the bonus.

“Sometimes banks will put on a competitive interest rate in order to get an increase in deposits and after they achieve that goal they’ll drop it,” Tindall said.

“They are pretty easy to move.”

If you don’t think you’ll be able to consistently meet whatever conditions a bank has put on their account, then you can also consider one of the no-strings attached offers in the market.

They command a lower rate, but in many cases are superior to the online savings accounts that millions of people are languishing on.