Commonwealth Bank hits savers with further rate cuts

Australia’s largest bank has dealt a blow to savers, implementing further rate cuts that are more than the recent interest carving by the central bank.

Commonwealth Bank has dealt another blow to savers by slashing savings rates on deposit accounts by more than the Reserve Bank’s recent interest carving.

The country’s largest bank on Friday morning clipped savings rates by five basis points on its standard and conditional deposit accounts – the second time CBA has cut rates since the central bank announced further monetary easing measures on November 3 that included lowering the official cash rate to 0.1 per cent.
CBA since November 3 has lowered savings rates on deposit accounts between 20 and 25 basis points, which is more than the 15 basis point reduction prescribed by the RBA.

CBA’s standard NetBank Saver account now attracts a five-month introductory rate of 0.55 per cent that then changes to a measly ongoing rate of 0.05 per cent.

The country’s second largest bank on Friday morning clipped savings rates by five basis points on its standard and conditional deposit accounts. Picture: Annette Dew

CBA’s conditional GoalSaver account offers a maximum rate of 0.45 per cent for balances under $50,000, while balances over the threshold garner a rate of 0.5 per cent. The maximum interest is only obtainable if the savings balance increases each month.

CBA is now on par with ANZ in offering the lowest savings rates of the big four banks.

According to RateCity, 70 banks across the industry have lowered savings rates since the RBA cut, with ING offering the highest ongoing rate at 1.35 per cent.

RateCity research director Sally Tindall said CBA’s most recent cut should prompt customers to shop around for a better deal.

“CBA has snuck in a second cut to interest rates right before Christmas on its popular savings accounts,” Ms Tindall said.

“While there are better savings rates on offer, sadly CBA isn’t the only bank hacking away at rates.”

RateCity research director Sally Tindall said CBA’s most recent cut should prompt customers to shop around for a better deal. Picture: Supplied.

Banks have been forced to shave rates due to the low interest environment that has been fuelled by the economic downturn sparked by the coronavirus pandemic.

Lower interest rates place more pressure on banks’ net interest margins and push up the cost of paying interest to customers.

Ms Tindall noted Australians had squirrelled away more than a $100 billion in savings since the beginning of COVID-19.

“The banks are jam-packed full of cash they can’t afford to pay interest on,” she said.

“Extra cash in the bank is a headache for them. As a result, banks are cutting corners every way they can to balance the books.”

RateCity says the average ongoing savings rate in Australia is 0.42 per cent.

Rival bank Westpac is offering a lucrative 3 per cent savings rate for people under the age of 30 for balances up to $30,000.