Publicised savings rates can be deceptive
Which type of savings accounts pay the best returns? Until recently, term deposits tended to offer the best deal for savers. Banks were scrambling to lock in this secure source of funds and were paying over the odds in doing so.
Recently, however, there's been a changing of the guard. As people do more of their banking on the internet, banks are increasing the interest rates on online "bonus saver" accounts as a way to shore up their funding.
In 2009, the average bonus saver account interest rate was about 50 basis points lower than the cash rate. Today the average bonus rate is about 100 basis points higher than the official rate - while the best rates are about 200 basis points higher.
And as this week's graph shows, the average online "bonus" account offered by the majors has overtaken the three-month-term deposit "specials".
This rise of bonus savers has plenty of advantages - especially if you're reluctant to lock away your money in a term deposit. But, as always, there are also catches.
Most of the time, banks only pay the "bonus" rate of interest if you don't make any withdrawals, and sometimes you need to make a minimum regular contribution to the account as well.
Banks also make a big effort to market their "honeymoon" interest rates in glossy brochures, but these rates often lapse after a limited time, or they apply to new customers only.
If you don't qualify for the bonus rate, or the honeymoon period expires, you'll generally receive a much lower "base" rate.
According to the financial research firm Canstar, the average rate paid on online savings accounts has slipped to only 2.53 per cent over the past few months.
Why do the banks pay you so much less if you don't meet their bonus conditions?
For one, new rules mean they put a higher price on money that is "sticky", or won't be suddenly withdrawn. A few banks have even launched products that require you to give a month's notice for withdrawals.
But there is also an obvious reason why these base rates are so much lower than the more publicised promotional rates: consumer inertia.
The banks realise that many people can't be bothered constantly reassessing what's available and moving their money somewhere more attractive when promotional offers expire.
It's also much cheaper for banks to offer the most competitive rates to new customers who switch - rather than the billions in deposit accounts they already have on their books.
So even though promotional rates grab the most publicity, it's likely many people are actually receiving much lower returns.
This may all sound terribly obvious, but whether or not you qualify for the full bonus rate can make a big difference to whether you're really saving or slowly having your money eroded by inflation.
Canstar's research showed that after tax and the Medicare levy was taken into account, the average base online savings account returned just 2 per cent - which is lower than inflation.