Australian households are saving at their highest level since 1987, but consumers are not putting their money to work. Instead, they are choosing to leave it in low interest accounts.
Australian Bureau of Statistics (ABS) data released this month found the household savings ratio increased to 11.5 per cent of financial consumption expenditure in the March quarter – the highest it has been in 24 years.
Data from the Australian Prudential Regulation Authority (APRA) found there is just under $500 billion sitting in household deposit accounts with banks alone, meaning Australians have $220 billion more in their accounts than they did five years ago.
Online comparison website RateCity chief executive Damian Smith said many households would be holding much of this cash in accounts with very low or even no interest.
“Even if only 15 per cent of the $500 billion sitting in bank deposits is in low or zero interest transaction accounts, then Australians could be missing out on as much as $4 billion interest,” Smith said.
This figure is based on money going into online savings accounts, where the average interest rate is 5.24 per cent.
