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CBA gives its popular savings accounts yet another haircut

CBA gives its popular savings accounts yet another haircut

Australia’s biggest bank, CBA, has today cut its savings rates by up to 0.07 per cent.

The RBA has not moved the cash rate since 3 November 2020, however the bank has made up to six cuts on some of its savings rates in this time.

Today’s cuts

Savings accountOld max rateNew max rateChange
GoalSaver0.35%0.30%-0.05%
Youthsaver (under 18yrs)0.60%0.55%-0.05%
NetBank Saver0.40% for 5 mths then 0.05%0.33% for 5 mths then 0.05%-0.07% to intro rate

Note: To qualify for max rate for GoalSaver and YouthSaver balance must be higher at end of month.

Cuts since 1 November 2020, CBA vs cash rate

Max rate

1 Nov 2020

Max rate

today

Change
CBA GoalSaver0.75%0.30%-0.45%
CBA Youthsaver (under 18 yrs)1.00%0.55%-0.45%
CBA NetBank Saver0.75% (5 mths)0.33% (5 mths)-0.42% (intro rate only)
Cash rate0.25%0.10%-0.15%

Note: The max rate on the GoalSaver on 1 November was for balances of $50K and over. The rate for under $50K was 0.50%.

RateCity.com.au research director, Sally Tindall, said: “Over the last 10 months, CBA has been quietly chipping away at its savings rates. While the cuts have all been relatively small, they’re starting to add up.”

“If you have money in the bank, make sure it is working as hard as it possibly can,” she said.

“Australia’s largest bank might be paying peanuts to its savings customers, but other banks are still offering rates four times higher if you shop around.”

RateCity.com.au database shows there are nine banks offering ongoing savings rates over 1 per cent.

“Young savers can get access to even higher rates if they know where to look. Westpac is handing out up to 3 per cent to Australians aged 18 to 29. That’s staggering considering CBA’s offering the same cohort a maximum ongoing rate of just 0.3 per cent.

“Just beware, most savings accounts come with fiddly terms and conditions to get the maximum rate, so make sure you qualify,” she said.

Big four bank: conditional savings rates

BankAccountMax rate
CBAGoalSaver

0.30%

WestpacLife

0.40%

NABReward Saver

0.30%

ANZProgress Saver

0.35%

Source: RateCity.com.au. Conditions apply for max rate.

Big four banks standard savers

BankProductIntro rate (3-5 mths)Ongoing rate
CBANetBank Saver

0.33%

0.05%

WestpaceSaver

0.40%

0.05%

NABiSaver

0.35%

0.05%

ANZOnline Saver

0.30%

0.05%

Source: RateCity.com.au Intro rate terms - CBA & Westpac 5 months, NAB 4 months, ANZ 3 months.

Highest ongoing savings accounts (no age restrictions)

BankMax rate
ING

1.35%

AMP Bank

1.25%

MyState Bank, Virgin Money, 86 400

1.20%

Source: RateCity.com.au $25k balance. Conditions apply for max interest rate.

Young Adults: highest ongoing savings rates

BankAccountMax rate
Westpac LifeAges 18 to 29 (up to $30K)

3.00%

BOQ Fast Track StarterAges 14 to 24 (up to $10K)

2.50%

Source: RateCity.com.au Conditions apply for max interest rate.

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This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

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Today's top savings accounts products

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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.

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.

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.

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.

What are the two types of NAB locked savings accounts?

With a locked savings account in NAB, you can earn bonus interest and learn financial discipline. NAB offers two types of locked savings accounts, each with their own terms and conditions.

The NAB Reward Saver account pays a variable base interest rate of 0.05 per cent per annum and a bonus interest of 0.55 per cent. You’re eligible for the bonus if you make a minimum of one deposit on or before the second last banking day and have no withdrawals in the month.

Meanwhile, the NAB iSaver account provides 0.05 per cent as the standard base interest rate and a fixed bonus margin of 0.55 per cent during the first four months from the date of opening the account. You can park your cash in the account and enjoy unlimited monthly transfers between linked daily bank accounts without impacting the interest rate.

What is a Westpac locked savings account?

The Westpac locked savings account (also known as "Westpac Life") can help customers reach savings goals faster through bonus interest. Customers receive 0.2 per cent standard base interest with a variable bonus rate of 0.35 per cent when the closing balance at the end of the month is higher than the opening balance.

There are some conditions to earn the bonus interest on Westpac's locked savings account, though. First, you’ll need to increase the balance each month either through a deposit or not making any withdrawals, and then link it to a Westpac Choice account and make at least five eligible payments using your debit card. Please consult your bank as to what an eligible payment is. 

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 have multiple ING savings accounts?

Yes, you can open up to nine accounts with ING at any particular time. If you’re saving money for various goals, such as buying a car or taking a holiday, you can name each of your multiple ING savings accounts differently.

To get a Savings Maximiser account, you’ll need to deposit more than $1000 every month and make at least five additional purchases. If you also want to grow your savings, from 1st March 2021, you can earn up to 1.35 per cent per annum variable interest on one account with a balance of up to $100,000 when you also maintain an Orange Everyday account.

With ING, multiple savings accounts can help keep track of all your savings goals. All the accounts offer flexible withdrawals where you can withdraw as low or as high as you want without impacting your earning interest rate. However, you can only earn the bonus interest on one account. To apply for a Savings Maximiser account, you can visit ingdirect.com.au.

What is an ANZ locked savings account?

An ANZ locked savings account locks your money and prevents you from spending. You may use a standard savings account as the account where your salary is deposited. You can then withdraw funds when needed, but aren’t able to make purchases with it. However, this account may not grow much as the continual withdrawing of funds will limit the interest you can earn.

With a locked savings account in ANZ, you know your savings will grow because you can’t access the money. You can also qualify for a bonus when you deposit at least $10 per month and don’t make any withdrawals. To help you with this further you can set up an automatic transfer from your regular ANZ savings or transaction account so you don’t forget to make a monthly deposit.

Your ANZ locked savings account offers you a base interest rate of 0.1 per cent per annum plus an additional bonus interest of 0.49 per cent per year. The interest is calculated daily and credited to your account on the last working day of the month.

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.

Do banks run credit checks on savings accounts?

When you apply to open a new savings account, some providers may conduct a credit check, meaning that they will ask a credit bureau for your credit history. This isn’t always the case on savings accounts though and depends on the provider, as you aren’t borrowing money. 

As you are opening a savings account and not borrowing funds, this credit check is considered a soft inquiry and should not affect your credit score. If the bank has run the credit check, you can often still open a savings account even if you have a poor score, provided you meet other requirements. 

What are the requirements of an ING Bank locked savings account?

An ING bank locked savings account - also called a term deposit - offers you interest in exchange for holding your money for a period of time.

The terms offered include as little as 90 days or as long as two years. Generally, the longer you lock your money away, the higher the rate of interest. 

The minimum deposit amount for an ING locked savings account is $10,000. 

To be eligible to apply, you must: 

  • Be an Australian resident for tax purposes
  • Be aged 13 years or older
  • Hold the account for personal use (ING offers business term deposits as a separate product). 

 

Do I have to claim interest on my savings account?

When you lodge your income tax returns, you must include in the documentation all your sources of income, including bank interest. Your bank will report any interest you earn on the funds in your savings account to the Australian Tax Office (ATO). When the ATO then compares this information with your tax returns,  you also need to have mentioned the interest earned. If there is any discrepancy, you’ll receive a letter from the ATO. 

Avoid this situation by ensuring you receive your bank statement with interest noted. Then declare the interest in your tax returns and pay the tax that’s applicable based on the income tax rate.

You only need to claim your share of the interest earned for joint accounts. If you manage an account for your child and receive or spend money via this account, you will also need to report any interest earned from said account.