Banks axe savings rates as RBA tipped to make Melbourne Cup Day rate cut

Banks axe savings rates as RBA tipped to make Melbourne Cup Day rate cut

Banks are slashing their savings account rates in the lead-up to a widely predicted cash rate cut in November.

Thirty-one banks across Australia, including the likes of Westpac and ANZ, have trimmed savings rates in the past two weeks, according to RateCity data.

The average savings rate cut over the past fortnight was 14 basis points.

The biggest rate cut recorded was from P&N Bank, which axed its Hi Saver base rate and bonus rate by a combined 40 basis points, bringing the account’s maximum rate to 1 per cent.

Meanwhile, Westpac and its subsidiaries, including St George, Bank SA and Bank of Melbourne, cut its maximum savings account rates by 10 basis points last week.

The maximum savings rate a customer can get across the Incentive Saver and Maxi Saver is now 0.80 per cent.

Savings rates among the big four banks have steadily dropped over the past year, RateCity records showed.

The average big four maximum savings rate plunged from 1.69 per cent in October 2019 to 0.69 per cent in the past week.

NAB holds the title of offering the highest max rate of 0.80 per cent, while ANZ and Westpac’s max rate has seen the biggest fall in the past year of 1.15 percentage points.

November rate cut becoming more likely

The cuts came after Reserve Bank of Australia (RBA) Governor Philip Lowe hinted at a potential cash rate cut in a speech in mid-October, saying that a rate cut at this point in the pandemic could deliver more impact.

“When the pandemic was at its worst and there were severe restrictions on activity, we judged that there was little to be gained from further monetary easing. The solutions to the problems the country faced lay elsewhere,” he said.

“As the economy opens up, though, it is reasonable to expect that further monetary easing would get more traction than was the case earlier.”

RateCity research director, Sally Tindall, said it was likely that if a Melbourne Cup Day rate cut happens, many savers will feel the squeeze amid growing financial stress due to the roll-back of JobKeeper and JobSeeker.

“The RBA has a balancing act to play. Any rate cut is likely to be passed on to the millions of Australians who have money in the bank,” she said.

“However, with savings rates already hovering just above zero, many savers have already given up on the prospect of earning interest from their income.”

Yet more Australians are keen to save their money during the recession, with savings levels anticipated to remain high for the next three years, according to IBISWorld research.

Household net savings swelled to $42 billion from $7.1 billion in the June quarter, data from the Australian Bureau of Statistics (ABS) found. This was attributed in part to a $35.2 billion reduction in spending due to temporary business shutdowns.

Ms Tindall expects banks will face pressure to pass on rate cuts to mortgage borrowers, particularly existing customers.

“Lenders have been aggressively cutting variable rates over the last six months, but by and large these cuts have been reserved for new customers, or people willing to fix their rate,” she said.

“There are thousands of existing mortgage holders out there who aren’t in a financial position to switch banks. Any rate relief needs to be filtered down to them.”

Big four bank: Conditional ongoing savings rates

Bank Account 1 Oct 2019 max rate 13 Jan 2020 max rate 7 April 2020 max rate 16 Oct 2020 max rate
CBA GoalSaver





Westpac Life





NAB Reward Saver





ANZ Progress Saver










Source: Data accurate as at 19.10.2020.

Note: based on a balance of less than $50K. CBA has higher rates for higher balances. Rate cut was on 2 Oct 2019 by 25bps to 0.75

Highest conditional ongoing savings accounts

Bank Account 16 Oct 2020 max rate Conditions
Up Saver


5 or more card purchases per month from your Everyday Account.
ME Bank Online Savings Account


Tap & go four times a month. Balances up to $250,000.
Australian Unity Active Saver


Deposit $250, no withdrawals each month.
ING Savings Maximiser


Linked Orange Everyday bank account and deposit $1,000 or more per month and make 5+ card transactions each month.
MyState Bank Bonus Saver Account


Eligible deposit of $20 into Bonus Saver account in the calendar month and 5 eligible Visa card purchases on linked Everyday or Glide account in the calendar month.

Source: Data accurate as at 19.10.2020.

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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

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.

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.

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.

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

Should I open a Commonwealth locked savings account?

If you have trouble saving money, a Commbank locked savings account could be a potential solution. A locked savings account won’t let you make withdrawals and as such, it can help you grow your savings balance if you keep topping it up. 

The Commonwealth locked savings account advertises high-interest rates and minimal maintenance fees, along with a host of other incentives that will encourage you not to touch the money. 

The account offers a higher interest rate for each month that you make limited or no withdrawals, as well as regular deposits. 

To qualify for a Commonwealth locked savings account with the advertised features, you will need to fulfil specific criteria such as:

  • Depositing a fixed minimum amount into the account every month.
  • Making a fixed number of deposits each month.
  • Making a minimum or no withdrawals each month.
  • Maintaining a minimum account balance.

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 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.

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.

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 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.

How can I get a $4000 loan approved?

While personal loans and medium amount loans don’t offer guaranteed approval, there are steps you can take to help increase the likelihood of your application being approved, including:

  • Fulfilling the eligibility criteria (providing ID, proof of residency, proof of income etc.)
  • Checking your credit history (you can order one free copy of your credit file per year, and make sure that there aren’t any errors that may be bringing down your credit score)
  • Comparing carefully before applying (making multiple loan applications can mean having your credit checked multiple times, which can look bad to some lenders and reduce your chances of being approved by them)

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.

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.