Good news for long-suffering savers as NAB lifts its account deposit rates

NAB is increasing its saving and deposit rates, as competition for customers grows between banks.

National Australia Bank is the latest major bank to boost savings and deposit rates, as competition for funds in the sharply rising-rate environment fires up.

NAB will on Friday announce that its reward saver bonus rate will increase by 50 basis points per annum to 2.25 per cent, making it the second-best priced product among the major banks in that category.

However, it is still behind Westpac whose bonus saver rate is 2.35 per cent.

Both banks are, though, still well behind the leaders in the deposit and savings market. ING and Bank of Queensland-owned Virgin Money both offer 3.6 per cent respectively. ING’s rate is for balances of up to $100,000 while Virgin pays that rate for balances on as much as $250,000.

NAB’s digital ubank division has a saving rate at 3.35 per cent, from October 1, below that of its parent.

NAB is lifting its game in the savings market. Picture: John Gass

The latest pricing changes come during an aggressive interest rate rising cycle, and as banks closely monitor and manage what they earn on loans via their margins. Banks typically boost their margins in a rising rate climate as they pass on increases to mortgages, and typically hold back some of the increases from savers.

The Reserve Bank has pushed through rate rises amounting to 2.25 percentage points since May, taking the cash rate to 2.35 per cent, and putting more focus on savings and deposit rates.

NAB head of personal banking Rachel Slade.

NAB personal banking group executive Rachel Slade noted that a jump in the cost of living had spurred customers to be more “price savvy”, and banks were responding.

“The savings market is particularly competitive right now; across Australian banks we’re seeing moves on rates around fortnightly, if not more often, so it’s also a very active market,” she said.

“Savings rates move frequently throughout the year as banks respond to the market, so it’s always worth customers taking the time to check out what’s on offer.”

While NAB moved some of its rates, it didn’t change its online savings account which pays just 0.85 per cent. Its major rivals also kept their online rates steady despite September’s 50 basis point rise in the official cash rate.

The big four banks have all increased their home loan rates to fully reflect the RBA’s rate rise this month.

From Friday, NAB’s term deposit rates are going up by as much as to 0.85 percentage points. This includes its 11-month term deposit which increases by that amount to 2 per cent.

The bank’s 12-month term deposit rises by 0.25 percentage points per annum to 3.25 per cent.

“At NAB, we’ve made more than 20 increases on our savings products over the last four months alone,” Ms Slade said. “Our popular 12-month term deposit right now is offering Australians 3.25 per cent – a rate not seen from major banks in about seven years.

“The most competitive rate depends on how much a customer wants to put away in savings and how quickly they want to access their funds as cash.”

ANZ this week announced that its plus savings rate on its new digital platform and app would increase by 30 basis points to 3 per cent for balances under $250,000. But the bank is yet to announce changes to more popular products or its online saver.

ANZ’s online saver is paying 0.6 per cent for existing customers and its progress saver sits at 1.65 per cent, according to RateCity.

Commonwealth Bank and Westpac were first out of the blocks with changes to savings rates after the RBA last week moved rates for a fifth consecutive month.

Originally published as Good news for long-suffering savers as NAB lifts its account deposit rates