The Reserve Bank of Australia's (RBA) recent decision to leave the cash rate untouched this July could finally put an end to the unusually high interest rates on savings accounts and analysts are in turn advising borrowers to use the opportunity to settle debts.

RateCity chief executive Damian Smith said that with the interest rate fixed at 4.5 percent for now, depositors should not expect substantial growth in their savings rates though he offered that "cash investments, such as term deposits and online savings accounts, should continue to give attractive interest rates for savers, due to ongoing competition for deposits by financial institutions."

Analysts said that as the RBA pushed up the rate, starting in October last year, major banks also dangled saving rate offerings of between 1.90 percent in September to a high of 3.65 percent in May, which was eventually carried over to June.

On the other hand, commercial banks decided to hike their variable mortgage rates and imposed an additional $300 to a monthly repayment obligation that amounts to $300,000 and according to RBA, interest rate on such variable mortgage reached 7.40 percent in June, coming from the 5.80 percent seen in September last year.

Considering such volatile movements from the financial institutions, Mr Smith said borrowers must exercise caution in taking in too much loans when relief was in effect, warning that the bottomline is "this is when your repayments take up a large chunk of your income."

He said that such practices could leave an individual facing the spectre of "having less money for other expenses such as bills, groceries, travel and entertainment and in the end, over-borrowing can be very damaging to your financial situation."

Figures from the Australian Bureau of Statistics (ABS) showed that when interest rate was at three percent in September last year, home loans spiked by 5.1 percent as compared to that period's previous month, though that peak eventually slid every month since then.

The RBA has also reported that credit card balances accruing interest jumped to $34.012 billion when rate movements were paused in February, as compared to the previous month posting of $227 million, but it also noted that credit repayments went down by 4.7 percent to $17.716 billion in February, coming from the $18.593 billion in January.

With that, Mr Smith reiterated that Australians need to avoid over-borrowing on loans and credit cards and instead reduce their debts while the cash rate is on hold, stressing that "repaying the highest rate debts (such as credit cards) first is generally the best strategy, but use any rate reprieve to pay down home loan debts where you can."

Notwithstanding the uncertain economic situation, a number of market economists are predicting that the RBA would opt for a 4.75 percent rate in August though the cash future market has been fully adjusted for a next rate hike to come by late 2011.