Commonwealth Bank has slashed savings rate following RBA cut

Commonwealth Bank has delivered the latest blow to savers by slashing rates on deposit accounts for the eighth time this year.

Commonwealth Bank has delivered the latest blow to savers by slashing rates on deposit accounts.

Recent interest rate carvings by the Reserve Bank has forced the country’s largest bank to clip savings potential on several deposit accounts, including its kids YouthSaver, which is commonly associated with CBA’s school Dollarmites program.

On November 3, the RBA lowered Australia’s cash rate by 15 basis points to 0.1 per cent as part of its economic monetary policy response to the coronavirus-induced recession.

However, the knife taken to its youth savings product is larger than the RBA’s recent rate cut, with the major bank slashing its YouthSaver by 20 basis points to 0.8 per cent for balances less than $50,000. Balances over $50,000 hold an ongoing rate of 0.05 per cent.

CBA since the start of the year has cut savings rates eight times. Savings products are heavily used by retirees who treat accrued interest as income.

CBA since the start of the year has cut savings rates eight times. Picture: NCA NewsWire / Gaye Gerard

The bank has shaved 15 basis points from its standard Net Bank account, which now has an introductory rate of 0.6 per cent before converting to an ongoing rate of 0.05 per cent.

Its conditional GoalSaver account has also been clipped, with the savings rate on balances over $50,000 being cut by 20 basis points to 0.8 per cent, while balances under $50,000 attract a new ongoing rate of 0.45 per cent.

Canstar finance executive Steve Mickenbecker said CBA was the ninth bank to slash rates on deposits accounts since the RBA’s recent cut.

“This time the cuts are bite-sized chunks between 0.10 per cent and 0.20 per cent, just like the other seven cuts this year, but in all they add up to a main-course-sized 1.05 per cent reduction to CBA’s Netbank Saver and 0.70 per cent to its GoalSaver,” he said.

“Other banks will join CBA in passing on last week’s RBA cash rate reduction to savers, meaning today’s cuts to savings rates won’t be the last.”

Out of Australia’s major four banks, CBA is currently offering the lowest advertised savings rates.