Savers savaged as CBA, NAB cut rates on popular accounts

TWO of Australia’s biggest banks have dealt a punishing blow to savers, heavily cutting the interest rates they pay on popular savings accounts — in some cases deeper than the RBA’s rate cut.

TWO of Australia’s biggest banks have dealt a punishing blow to savers, heavily cutting the interest rates they pay on popular savings accounts.

The Commonwealth Bank and National Australia Bank are cutting rates on a suite of accounts and, in the CBA’s case, some of the reductions are deeper than the cut last week to the Reserve Bank’s cash rate.

Both banks are cutting the base rates on their online savings accounts by 0.2 percentage points to a wafer-thin 0.3 per cent.

The base rate is the ongoing rate of interest that applies once promotional introductory bonuses expire after three, four or five months.

Savers are losing out as banks cut interest rates paid on deposit accounts.

Australia’s biggest bank, the CBA, is reducing the introductory rate on its NetBank Saver account by 0.31 percentage points to 2.2 per cent.

It has cut the maximum rates on its Goal Saver account by 0.2 to 0.3 percentage points, depending on the account balance.

NAB has cut the maximum rate, including bonuses, on its Reward Saver account by 0.25 percentage points to 2.05 per cent.

The moves come after the RBA this month cut the cash rate 0.25 percentage points to a historic low of 1.25 per cent.

Following that move, the CBA and NAB reduced their variable home loan rates by the same margin.

Fellow “big four” banks ANZ and Westpac are yet to announce changes to savings account rates.

Steve Mickenbecker, a spokesman for financial services broker Canstar, noted ANZ and Westpac had not passed on the RBA’s full rate cut last week to home loan customers.

Canstar's group executive financial services, Steve Mickenbecker

As a result, they “may be in a position” to be more generous to savers, he said.

ANZ has cut its variable mortgage rates by 0.18 percentage points, while Westpac has cut most variable home loan rates, including those for owner-occupier mortgages, by 0.2 percentage points.

Both ANZ and Westpac were criticised for their decision, and Reserve Bank governor Philip Lowe broke from usual practice and called for a full pass-through to mortgage customers.

Macca’s perspective.

A CBA spokesman, speaking on Thursday night ahead of the cut to savings rates yesterday, said the bank regularly reviewed its “portfolio of deposit products”.

It was making some changes to rates “to reflect current market conditions, including the record-low interest rate environment”, he said.

Mr Mickenbecker said the cut to savings rates was an inevitable consequence of the RBA’s move last week.

“This leaves savings rates at rock bottom levels, and will put the banks under intense pressure if and when the RBA cuts the cash rate again in the next few months,” he said.

“The potential to squeeze profit margins will be keeping bank executives awake at night.”

The prospects that Australia faced negative interest rates, as seen in other countries, were growing, he said.

InfoChoice chief Vadim Taube said: “We have never seen at-call savings account rates this low.

“These rates are now only fractionally above the inflation rate of 1.3 per cent and the base rates are all well under the inflation rate.

“That means your money is not growing significantly in real terms and could be losing value if you leave it sitting in one of these low rate savings accounts.”

Shares in all four big banks dipped yesterday, with NAB falling the most, ending the session 1 per cent lower at $26.73.

with The Australian