The Commonwealth Bank slashes interest rates on savings accounts
The Commonwealth Bank is the first of the big four banks to cut savings interest rates. This is how it will affect you and your bank account.
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The nation’s largest bank has slashed interest rates on many popular savings accounts leaving some savers getting close to no returns on their money.
The Reserve Bank of Australia cut the cash rate last week to a record low of 0.5 per cent delivering borrowers cheaper home loan rates.
However savers have now been hit with even worse returns on their hard-earned money.
The Commonwealth Bank has reduced some of its savings account deals by the full rate cut – 0.25 percentage points – bringing down returns for those keeping cash in the bank.
The bank’s Pensioner Security Account, GoalSaver Account and Youthsaver Account have all been hit.
On a Pensioner Security Account with balance up to $49,999 savers will only get a return of 0.01 per cent.
On $10,000 in this account the saver would an annual return of just a paltry $1.
While on the bank’s GoalSaver Account rate have tumbled down by 0.25 percentage points.
The standard rate on the account now sits at just 0.01 per cent, while the bonus rates range between 0.64 per cent and 1.34 per cent depending on the account balance.
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And junior savers who hold a YouthSaver Account have also been stung.
The standard variable balance on savings is just 0.05 per cent, while the bonus interest rate fell by 0.25 percentage points to just 1.5 per cent.
The rate cuts are effectively immediately.
Financial comparison website RateCity’s spokeswoman Sally Tindall said “the cuts from CBA to some of their more popular savings accounts is like rubbing salt into the wound”.
“The outlook for savers has turned grim to dire,” she said.
“In this low-rate environment very few savings accounts are keeping up with inflation.
“At this moment neobanks Up and 86 400 are offering rates of 2.25 per cent if you meet the terms and conditions although these rates are unlikely to stay around for long.”
Ms Tindall said CBA left their Netbank Saver account untouched.
It has an introductory 1.65 per cent for five months which falls away to an ongoing rate of just 0.1 per cent.
The Commonwealth Bank executive general manager Kate Crous said, “We regularly review our products and have made changes to some of our deposit rates due to the unprecedentedly low interest rate environment”.
“In making this decision we have been very conscious of our near 6 million deposit customers and carefully balanced their needs, some who rely on interest earned on their savings, as well as our home loan customers receiving the benefit of a reduction in their interest rates,” she said.
“We encourage any of our customers to speak to us to ensure their products suit their needs.”
It is expected the remaining big four banks – ANZ, National Australia Bank and Westpac – will reduce some of their savings rates in the coming weeks.
All the big four banks have reduced home loan variable rates by the full 0.25 per cent cut, but CBA will wait the longest to pass on the cut to customers.
It does not become effective until March 24 – three weeks after the RBA’s decision to slash rates.