ANZ and NAB first big banks to cut savings rates again

ANZ and NAB first big banks to cut savings rates again

ANZ and NAB have today reduced their savings rates following the Reserve Bank’s 2 July decision to cut the cash rate to 1 per cent. 

NAB CUTS

Effective today, NAB has cut most savings accounts by 0.19 percent, matching the cut it made to home loan rates. This fulfils the bank’s promise not to lower its savings rates by more than its mortgage rates.

iSaver (intro rate for 4 months)

Old rates

New rates

Intro rate

Ongoing rate

Intro rate

Ongoing rate

July cut

2.30%

0.30%

2.11%

0.11%

-0.19%

 Reward Saver (1 deposit, no withdrawals for max rate each mth)

Old rates

New rates

 

Base rate

Max rate

Base rate

Max rate

July cut

0.30%

2.05%

0.11%

1.86%

-0.19%

 ANZ CUTS

ANZ has cut its Online Saver account by 0.15 per cent and its Progress Saver by 0.25 per cent following a 0.25 per cent cut for its variable home loan customers. 

Online Saver (intro rate for 3 months)

Old rates

New rates

Intro rate

Ongoing rate

Intro rate

Ongoing rate

July cut

2.10%

0.30%

1.95%

0.15%

-0.15%

Progress Saver (deposit $10/mth, no withdrawals for max rate each mth)

Old rates

New rates

 

Base rate

Max rate

Base rate

Max rate

July cut

0.01%

2.20%

0.01%

1.95%

-0.25%

RateCity.com.au research director Sally Tindall said ANZ and NAB’s intro rate savings accounts now earned next to nothing after the honeymoon rate finishes.

“NAB is now offering an ongoing rate of 0.11 per cent on its Reward Saver account while ANZ is offering a rate of 0.15 per cent on its Online Saver account. Customers can do better than this,” she said.

“NAB and ANZ were first of the big four out of the blocks this time with cuts for savers but Australia’s two biggest banks are unlikely to be far behind. The question is not if they will cut, but when and by how much.

“Given that CBA and Westpac didn’t pass on the full cut to home loan customers, it’ll be interesting to see what they do to their savings accounts,” she said.

Some of the highest savings account rates on RateCity.com.au

Bank

Max rate

Conditions

Endeavour Mutual Lifestyle Account

2.75%

Deposit $400/mth. Up to age 35

Ubank USAver with Ultra

2.60%

Deposit $200/mth into Ubank savings or trans account

MyState Bonus Saver

2.60%

Deposit $20/mth and make 5 transactions from linked account

RAMS Saver

2.55%

Deposit $200/mth and no withdrawals

Australian Unity Active Saver

2.55%

Deposit $250/mth and no withdrawals

 HOW THE BIG BANKS SAVINGS ACCOUNTS CURRENTLY STACK UP

Big four savings accounts – conditional rates

Bank

Product

Base rate

Max. rate

How to earn max. rate

ANZ

Progress Saver

0.01%

1.95%

Deposit $10 and no withdrawals per mth.

CBA

GoalSaver

0.01%

1.40%*

Deposit $200 and no withdrawals per mth

NAB

Reward Saver

0.11%

1.86%

One deposit and no withdrawals per mth

Westpac

Life

0.80%

2.10%

Make a deposit and end with higher balance per mth

* For balances under $50K. CBA offers higher rates for higher balances.

Big four savings accounts – introductory rates

Bank

Product

Base rate

Max. rate

Introductory term

ANZ

Online Saver

0.15%

1.95%

3 months

CBA

NetBank Saver

0.30%

2.20%

5 months

NAB

iSaver

0.11%

2.11%

4 months

Westpac

eSaver

0.30%

2.31%

5 months

Note: CBA and Westpac expected to move their savings rates following the July cash rate cut. 

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Learn more about savings accounts

What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria

Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

What is a good interest rate for a savings account?

A good rule of thumb to keep in mind with savings accounts is to look for a rate that is higher than the CPI inflation rate. This number is constantly changing, so check the Reserve Bank of Australia’s page. If you aren’t earning interest above this then the value of your money will go backwards over time.

Can you set up direct debits from a savings account?

It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

Some transaction accounts allow you to set up direct debits and also earn interest, though you may not enjoy as much flexibility as a dedicated transaction account, or get as high an interest rate as a dedicated savings account.

How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

  • Personal details, including identification (driver’s license, passport etc.)
  • Tax file number
  • Employment details

How much money should I have in my savings account?

A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

Can you direct deposit to a savings account?

Yes. You can make one off payments or set up regular direct deposits into a savings account. This can be organised easily through online banking or by making deposits in a branch. Talk to your lender to find out the easiest way for you to set up direct deposits.

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

Can you set up a savings account online?

Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

Online-only savings accounts are often less expensive than other savings accounts, though they may not offer the same flexibility, features, or face-to-face service as more traditional savings accounts.