Australia’s big four banks called out for ripping off some customers with savings accounts

Although some banks have been quick to pass the buck onto borrowers following the latest interest rate hike, savers are not getting the same treatment.

Some of Australia’s biggest banks are ripping off customers when it comes to their returns from savings accounts.

That’s according to independent analysis from comparison website Canstar, released on Thursday.

It comes after the Reserve Bank of Australia brought up the cash rate by 25 basis points on Tuesday, from 3.1 per cent to 3.35 per cent, a significant leap from its historic low of just 0.1 per cent.

In all, the rate has jumped 325 basis points in just 279 days, rendering it the fastest and largest rate hiking cycle on record.

However, although banks have been quick to pass the buck onto borrowers, savers are not getting the best end of the deal.

Canstar said the rates the big banks were offering to savers had “fallen short” compared to the amount they are charging borrowers.

In particular, the findings lashed Westpac and the Commonwealth Bank of Australia (CBA), the most recent institutions to announce they were passing on Tuesday’s rate rise.

Governor of the Reserve Bank of Australia (RBA) Philip Lowe. Picture: Brendon Thorne/Bloomberg via Getty Images

According to Canstar, customers with several types of savings accounts have been stung by the rort.

Base savings accounts have risen by an average of 1.83 per cent while bonus accounts with certain conditions have risen by a total of 2.77 per cent.

Promotional accounts that pay an introductory rate for a limited time have increased the most, up by 3.21 per cent since April last year. However, savers who have passed the introductory period have only seen a 1.35 per cent increase.

Canstar’s finance expert, Steve Mickenbecker, warned that savers were missing out by banking with Australia’s largest four institutions – Westpac, NAB, ANZ and the Commonwealth Bank.

“The approach of the banks since April last year has been to trim increases to savings accounts,” Mr Mickenbecker said.

“Rate rises have been smaller than the Reserve Bank moves or not applied to all savings products, or have been given mainly as bonuses either to new customers or based on the saver meeting bonus conditions.”

He concluded that “the biggest losers” are people with savings accounts in ‘the big four’ banks because they have only seen an average of a 0.99 per cent savings rate increase.

The big four banks “are using existing savers to balance the books as they have offered attractive rates for new borrowers and paid higher interest rates for wholesale funding,” Mr Mickenbecker added.

“It’s not fun for savers to be the meat in the sandwich.”

The big four banks, particularly Westpac and the CBA, have been called out.

On Wednesday, the CBA increased its GoalSaver bonus account to 0.75 per cent, while its Youthsaver bonus account rose by 0.5 per cent, bringing them both to a return of 4 per cent.

CBA’s new interest rates for savers will kick in from Friday.

At the same time, Westpac will increase both its Westpac Life bonus and its eSaver promotional account rate by 0.25 per cent to 4 per cent.

These changes will come into effect on February 21.

The CBA defended their savings policies but did not acknowledge how some savers won’t get the full extent of the changes.

A CBA spokesperson claimed that their interest rates were best of the four banks, saying their own analysis showed this.

The Westpac spokesperson referred news.com.au to their original announcement regarding them passing on the interest rate rise.

NAB also under fire

It comes just a day after NAB backflipped on dragging its heels over passing the rate rise on to those with savings accounts after copping criticism.

On Tuesday night, NAB announced it was raising its standard home loan rate by the full 25 basis points, effective from February 17 – but only that its savings and term deposit rates were “continually under review”.

However, on Thursday the bank revealed it would be increasing rates for savers for both its NAB’s iSaver and its Reward Saver accounts by 25 basis points.

The bank’s previous “under review” announcement was slammed on social media.

“Why are you rats so quick to pass onto home loans but term deposits are under review? Absolute grubs,” one Twitter user replied.

“No delay in lifting your loan rates but deposits are continuously under review. Disgusting, this is why people do not trust banks,” another said.

ANZ, for its part, announced it would be raising rates for both its variable home loan and “some” savings customers – those on the ANZ Plus Save account for balances less than $250,000 – by 25 basis points to 4 per cent per annum, effective February 14.

Other smaller operators are offering better rates to customers.

Mr Mickenbecker advised savers to seriously consider changing to lesser known banks which were offering better deals.

“There are reasonable 4.5 per cent rates available to savers, but it may require switching banks. Even switching accounts at their own bank can often deliver 4 per cent returns,” Mr Mickenbecker said.

“The game of saving these days has become complicated and savers need to absorb the conditions in the fine print to make sure they will be able to meet bonus conditions every month or change banks when promotional rates expire.”

Instead, it’s the smaller banks who are offering the best rates for Aussies looking to save their hard earned dollars.