Savers suffer as big banks cut bonus rates

Savers suffer as big banks cut bonus rates

ANZ and NAB have today cut the interest rates on their savings accounts on the back of last week’s cut to the cash rate, affecting millions of customers. 

Both ANZ and NAB have chosen to cut their bonus savings rates by 0.25 per cent, leaving their base savings rates untouched. 

CBA, Australia’s largest bank, lowered their savings rates last week. Unlike ANZ and NAB, CBA has dropped the base rate on its popular Net Saver account by 0.05 per cent, in addition to cuts of up to 0.35 per cent on its bonus savings rates. 

RateCity.com.au research director Sally Tindall said that regular savers would be hurt the most by this current round of cuts. 

“Where this latest round of cuts is really going to hurt is with the consistent savers who go above and beyond to make sure they make regular deposits to qualify for high ongoing rates,” she said. 

“They’re going to be penalised by a full 0.25 per cent cut, probably because it’s one of the few places remaining to make cuts that will actually make a difference to the banks’ bottom line. 

“Meanwhile, the big banks’ standard savings accounts are about as satisfying as an English summer. They’re good for a very short stint before settling into a cold bleak reality. The truth is, even before this rate cut, they earned next to nothing after the introductory period expires. 

“Keen savers can still get relatively competitive rates, if they’re prepared to look beyond the big banks. Neo bank 86 400, and MyState Bank are still offering 2.50 per cent on their savings rate which are now two of the best rates on the market,” she said. 

Today’s cuts by ANZ and NAB are on the same day their home loan changes take effect. CBA has opted to cut its savings rates over two weeks in advance of its home loan changes. 

So far, 27 banks have cut savings rates with the remaining big bank, Westpac, still expected to cut post RBA. 

Changes to standard savings accounts 

These accounts have no ongoing terms and conditions. They typically include an introductory period which offers bonus interest for several months, before dropping to a low ongoing rate. 

 

Max rate (3 - 5 mths)

Base rate

 

Old rate

New rate

Change

Old rate

New rate

Change

ANZ Online Saver

1.85%

1.60%

0.25%

0.10%

0.10%

0.00%

NAB iSaver

2.11%

1.86%

0.25%

0.11%

0.11%

0.00%

CBA Netbank

2.00%

1.65%

0.35%

0.15%

0.10%

0.05%

Note: the intro rate periods are as follows: ANZ 3 mths NAB 4 mths; CBA 5 mths. 

Changes to conditional savings accounts 

These accounts require you to meet certain terms and conditions, such as one deposit a month and no withdrawals, in order to qualify for the bonus interest that month. 

 

Max rates (if conditions are met)

Base rate

 

Old rate

New rate

Change

Old rate

New rate

Change

ANZ Progress saver

1.85%

1.60%

0.25%

0.01%

0.01%

0.00%

NAB Reward saver

1.86%

1.61%

0.25%

0.11%

0.11%

0.00%

CBA Goal saver

1.15%

0.90%

0.25%

0.01%

0.01%

0.00%

Note: rates based on balances less than $50,000. CBA offers higher rates for larger deposits. 

Highest ongoing savings rates on RateCity.com.au 

Bank

Max rate

Conditions

86 400

2.50%

Deposit $1K /mth

MyState Bank

2.50%

$20/month & 5 or more transactions on linked account

Up

2.25%

5 or more transactions on linked account

Australian Unity

2.25%

$250/mth

RAMS

2.25%

$200/mth & no withdrawals

Notes: excludes kids savers and introductory rates.

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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.

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)

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.

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.

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.

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 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

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 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.

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.