The savings accounts stinging customers the hardest
The big four banks are offering savers appalling poor rates as low as just 0.1 per cent on their hard-earned cash. HOW YOU ARE LOSING OUT
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The big four banks are offering savers appalling poor rates as low as just 0.1 per cent on their hard-earned cash.
The Reserve Bank of Australia today kept the cash rate on hold at 0.75 per cent but savers continue to be decimated by dismal returns.
Analysis of savings accounts found the nation’s largest four banks all offer honeymoon deals on their regular savings accounts between 1.6 and 1.7 per cent, before they plummet to 0.1 or 0.11 per cent once the introductory period ends.
On the Commonwealth Bank’s popular NetBank Saver account their intro rate of 1.65 per cent drops after a five-month introductory period to just 0.1 per cent.
On $10,000 in savings this would deliver new savers $74.35 in interest over a 12-month period, while it would give just $10 in interest to existing customers, analysis by financial comparison site RateCity found.
Lifespan Financial Planning’s chief executive officer Eugene Ardino said low rates “were killing retirees” and he urged borrowers be wary of riskier investments advertising higher returns.
“It’s a time where you have to be careful because there are a lot of investments out there that bring higher returns but the risk is unacceptable,” he said.
“I would urge anyone seeking higher-yielding investments to seek advice.”
Some of the best savings rates are just 2.25 per cent and require strict conditions to be met.
RBA governor Philip Lowe has cut the cash rate three times in 2019, delivering huge savings for borrowers but poor returns to savers.
RateCity data found one and three-year term deposit rates offered by the big four banks range between just 1.14 and 1.4 per cent.
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The site’s spokeswoman Sally Tindall said the paltry savings rates were “hurting everyday Australians on their hard-earned cash”.
“From the interest returns on $10,000 savings you are likely to get the equivalent of no more than a few bottles of milk a year,” she said.
“And there’s no end in sight for savers, the RBA has made it very clear that rates are going to be low for an extended period of time so savings rates won’t be going up anytime soon.”
Earlier this week CBA chief executive officer Matt Comyn told a customer forum in Brisbane when assessing rates they try to cater for both savers and deposit customers.
He said they had only dropped their NetBank Saver account interest rate by 0.4 percentage points in 2019.
The other three big banks dropped their regular savings accounts by 0.39 to 0.4 percentage points this year.
BIG FOUR BANKS – REGULAR SAVINGS ACCOUNTS
• CBA, Netbank Savers, ongoing rate 0.1 per cent, introductory rate (5 months) 1.65 per cent.
• Westpac, eSaver, ongoing rate 0.1 per cent, introductory rate (5 months) 1.66 per cent.
• NAB, iSaver, ongoing rate 0.11 per cent, introductory rate (4 months) 1.7 per cent.
• ANZ, Online Saver, ongoing rate 0.1 per cent, introductory rate (3 months) 1.6 per cent.
Source: RateCity.