Dropping like flies: NAB joins growing list of banks cutting savings rates

Dropping like flies: NAB joins growing list of banks cutting savings rates

Australia’s third largest bank, NAB, has today cut rates on a range of savings, retirement and term deposit accounts.

NAB is the 30th bank to drop savings rates following the November 3 RBA rate cut. It’s also the third big four bank to cut savings rates in the space of a week, according to the RateCity.com.au database.

NAB Reward Saver

  Before Today Difference
Max rate 0.70% 0.55% -0.15%
Base rate 0.05% 0.05% 0%

At least one deposit and no withdrawals per mth for max rate.

NAB iSaver

  Before Today Difference
Intro Rate (4 mths) 0.75% 0.60% -0.15%
Ongoing rate 0.05% 0.05% 0%

NAB Reward Saver – change in interest earned, 1 January 2020 to today

Someone with $50,000 in a NAB Reward Saver account was getting a max rate of 1.61 per cent at the start of the year, earning approximately $67 a month in interest. Today someone with the same balance would get a max rate of just 0.55 per cent and earn approximately $23 a month.

  Max rate Monthly interest on $50K Monthly interest on $100K
1 Jan 2020

1.61%

$67

$134

Today

0.55%

$23

$46

Difference

1.06%

$44

$88

Note: assumes mthly conditions are met for max rate. Interest is calculated on an average mth.

RateCity.com.au research director, Sally Tindall, said: “Savings rates are dropping like flies. Thirty lenders have already cut rates with plenty more banks set to follow.”

“The big question now is how long will Westpac hold out, and will they cut their market-leading savings rate for young Australians?” she said.

“Westpac is currently offering 3 per cent for people aged between 18 and 29, although in the current climate, a rate like this has got to have a target on its back.

“Savers have to be on their toes if they want to keep their interest rate competitive. This typically means jumping through hoops to qualify for bonus interest each month, or bouncing from bank to bank chasing introductory rates,” she said.

Big four banks conditional savings rates

Bank Account Max rate

(if conditions met)

CBA GoalSaver

0.45%

Westpac Life

0.75%

NAB Reward Saver

0.55%

ANZ Progress Saver

0.50%

Source: RateCity.com.au. Note rates are for balances under $50K.

 

Big four bank: standard savings rates

Bank Account Intro rate Ongoing rate
CBA NetBank Saver (5 mths)

0.60%

0.05%

Westpac eSaver (5 mths)

0.75%

0.05%

NAB iSaver (4 mths)

0.60%

0.05%

ANZ Online Saver (3 mths)

0.45%

0.05%

Source: RateCity.com.au

Highest ongoing savings rates (excludes accounts specifically for younger Australians)

Bank Max rate Conditions
MyState 1.50% Deposit $20+ and make 5 trans per mth
ING 1.35% Deposit $1,000+ and 5 card purchases per mth
UBank 1.31% Deposit $200+ per mth

Source: RateCity.com.au 

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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.

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 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

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 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 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)

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 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.

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 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 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.

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.