Two of the big four banks have moved on savings rates

Banks are cutting one particular offering as they gear up for the Reserve Bank of Australia to do the same to the cash rate.

A flurry of banks have begun to cut term deposits in anticipation of a rate reduction by the Reserve Bank of Australia on Tuesday.

According to fresh figures from Canstar, 20 banks have cut at least one term deposit rate, including the big four banks.

Canstar says NAB and ANZ have each made cuts of up to 0.20 percentage points on one of the various savings products on offer.

The big four banks have begun to slash rates ahead of the RBA cash rate decision next Tuesday. Picture: NewsWire

NAB and ANZ are both offering 12-month interest rates of 4.20 per cent for new customers.

Canstar.com.au data insights director Sally Tindall said while an easing cash rate was good for borrowers, it was bad for savers.

“An easing of the cash rate is always a double-edged sword and this recent deluge of term deposit cuts is an unfortunate but timely reminder of this,” she said.

“Australians with money in term deposits could get a shock when their fixed period matures and they’re facing much lower interest rates.

“For those looking to lock up their hard-earned money in another term deposit, time may be of the essence.”

The RBA is widely tipped to cut the cash rate from 4.35 per cent to 4.10 per cent next week.

Ms Tindall said the banks were likely to pass these rates in full on to both savers and mortgage holders.

“Banks are expected to pass on cash rate cuts to their savings customers; however, moving your nest egg into a high interest saving rate should help cushion the blow,” she said.

While the banks are reducing rates, there are still some compelling offers on the market. Picture: NewsWire / Nicholas Eagar

While term deposit rates are falling, Ms Tindall said there were still options for bank rates above 5.50 per cent.

These include ING, MOVE Bank, BOQ and ubank, although each comes with their own terms and conditions that will need to be met to get the interest rate.

“High-interest savings accounts haven’t yet seen much movement recently, with four banks still offering ongoing savings rates up to 5.50 per cent, something keen savers have been relishing for more than a year. However, this could soon come to an abrupt end under the hammer of the RBA,” Ms Tindall said.

The banks have cut term deposit rates at the same time that Australians have stashed record amounts of money with the banks.

According to APRA data for December, the total amount saved in the bank by households hit $1.57 trillion – up $125.2bn, or 8.7 per cent, from a year ago.

Originally published as Two of the big four banks have moved on savings rates