Tough time for savers as the big four banks slash interest rates

Tough time for savers as the big four banks slash interest rates

ANZ is the last of the big four banks to cut their savings account rates, following the Reserve Bank’s decision to cut the cash rate earlier this month. 

ANZ today reduced the rates on their Progress Saver and Online Saver accounts by 0.20 per cent – 2 basis points more than they passed onto their home loan customers on 14 June 2019. 

As of today, ANZ still offers the highest ongoing savings rate out of the big four of 2.20 per cent, while Westpac offers the highest introductory rate of 2.31 per cent for a period of 5 months. 

RateCity.com.au research director Sally Tindall said: “Introductory rates have become the white elephant of banking.” 

“All four big banks have slashed their base rates to just 0.30 per cent interest, when inflation is sitting at 1.3 per cent. That’s a nightmare equation for anyone trying to save. 

Conditional rate savings changes: Big4 

Bank

Product

Max Rate  Pre RBA

Max Rate  Post RBA

Change

Conditions

CBA

GoalSaver

2.00%

1.70%

0.30%

Dep $200/mth, no withdraw, for bal $50K-$250K

Westpac

Life

2.30%

2.10%

0.20%

Make 1 dep/mth, balance higher at end of mth

NAB

Reward Saver

2.30%

2.05%

0.25%

1 dep/mth, no withdrawals

ANZ

Progress Saver

2.40%

2.20%

0.20%

Deposit $10/mth, no withdrawals

Intro rate savings changes: Big4 

Bank

Product

Base rate Pre-RBA

Max rate Pre RBA

Base rate Post RBA

Max rate Post RBA

Total change

Intro term

CBA

Netbank Saver

0.50%

2.51%

0.30%

2.20%

0.31%

5 mths

Westpac

eSaver

0.50%

2.51%

0.30%

2.31%

0.20%

5 mths

NAB

iSaver

0.50%

2.55%

0.30%

2.30%

0.25%

4 mths

ANZ

Online Saver

0.50%

2.30%

0.30%

2.10%

0.20%

3 mths

 RateCity.com.au data shows that over 47 banks have dropped their savings rates since the RBA cash rate cut on June 4, including ING, AMP, Bank of Queensland, ME, Suncorp and Bendigo, in addition to the big 4 banks. 

The average cut to savings account rates by banks who have moved is 0.23 per cent, while the maximum cut on the database is 0.50 per cent. As a result of all the changes, the average savings account rate on RateCity.com.au’s database is now 1.55 per cent*. 

“There’s no sugar coating the outlook for savers right now. With at least one, if not two more cuts to the cash rate on the horizon, the average saving rate could fall to 1.30 per cent. 

“Good saving rates might be hard to come by but it’s still worth shopping around,” she said. 

Market leading saving account rates

Account

Max rate

Conditions

UBank

2.87%

Mthly deposit of $200, no withdraw

BOQ

2.75%

Deposit $1K into linked trans a month

Endeavour Mutual Bank

2.75%

For people up to 35 years, monthly deposit of $400

ME Bank

2.60%

1 tap & go payment/wk with linked account

UBank has not cut this rate since the RBA cash rate change on June 4.  

Conditional rates:

These are savings accounts that require the customer to meet certain conditions every month in order to get the maximum rate of interest on an ongoing basis. 

Introductory rates

These are savings accounts where customers get a bonus interest rate for a short period of time when the account is first opened, typically between 3 and 5 months. 

*RateCity.com.au’s average savings rate excludes kids accounts and intro rates. Where conditions are required to get the maximum interest, it assumes these conditions are met.

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Fact Checked -

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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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 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.

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 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.

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 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. 

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 are the requirements for opening Commbank multiple savings accounts?

Existing Commbank account holders can open additional accounts online You can open multiple savings accounts with Commbank to meet various goals like a down payment for a home or buying a car. 

To open an account, you’ll need the following:

  • An Australian residential address
  • To be 14 years or older
  • A Tax File Number (TFN) or TFN exemption.
  • Tax residency details

If you’re not a current Commbank account holder, you’ll need an Australian driving licence, birth certificate or passport and Medicare card. You may also have to visit a branch if your identity cannot be confirmed online. 

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)

Should I open multiple savings accounts with UBank?

UBank offers customers an opportunity to make the most of their savings by opening multiple savings accounts. Having multiple savings accounts with UBank may be ideal for savers tracking different goals in separate accounts. 

It’s important to note that to earn bonus interest, you will still need to meet the conditions of the UBank savings account every month. If you don’t make these deposits, you will receive the standard interest rate, which is typically lower. 

Keep in mind that you won’t earn bonus interest on your UBank savings account in the month an account is opened and if you open multiple savings accounts with UBank, you'll start earning any bonus interest the following month. 

It's also not yet known how long the special interest rate will hang around for, so please check with your bank for more information. 

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.

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. 

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.