Commonwealth Bank cuts savings rates for the fifth time this year

Savers who have their money with Australia’s largest bank may be feeling the pinch as the bank cut savings rates today for the fifth time this year.
CBA takes knife to savers for fifth time 2020 - feature
Commonwealth Bank has slashed savings rates for the fifth time in 2020. Image source: mantisdesign, Shutterstock.

Commonwealth Bank cut introductory and bonus interest rates on its Youthsaver and Netbank Saver accounts by 0.05 percentage points today. The new rates are:

  • Netbank Saver: 0.90% (0.05% base rate plus 0.85% introductory rate for the first five months)
  • Youthsaver: 1.05% (0.10% base rate plus 0.95% bonus interest available when you meet certain deposit and withdrawal conditions)

The move marked the fifth cut to those accounts this year, having been reduced by a total of 0.80 percentage points and 0.75 percentage points respectively.

In comparison, the official cash rate has only moved by 0.50 percentage points this year to the current record low of 0.25%.

Regular savings rates have fallen by an average of 0.50 percentage points this year, while bonus savings accounts have fallen by an average of 0.48 percentage points, according to Canstar’s database. The current average savings account rate is just 0.60%, and 0.99% on bonus savings accounts.

Canstar analysis revealed that a saver with $10,000 sitting in a Youthsaver account at the start of this year has missed out on close to $31 in interest due to the cuts.

Canstar finance expert Steve Mickenbecker said a cut of 0.05% to your savings account may not sound like a lot, but piled on top of multiple cuts this year, it adds up to a heavy drag on savings goals.

“Savers must be feeling like the proverbial frog in the saucepan,” Mr Mickenbecker said.

“Rates have drifted down in steps, conditioning savers to a low rate environment, but ultimately delivering a blow to returns on savings.

He said retirees may not be suffering searing mortgage stress, but were living with the slow burn of knowing their savings would be largely eroded before they could expect interest rates to climb to supplement their retirement living.

“Even young people have been sucked into the COVID-19 vortex, with many losing their casual jobs and near half of the interest they could be earning,” he said.

How do CBA’s savings rates compare to the other major banks’?

Commonwealth Bank now comes in second place out of the big four banks for regular savings rates, with National Australia Bank taking out the top spot with a rate of 0.95%. Westpac has the highest youth saver rate at 1.10%, but also offers a competitive 3% interest option for young adults aged 18-29.

↓ Keep reading to see higher rates available from non-major banks

Top savings accounts from the big four

  1. 0.95% – NAB’s iSaver (0.05% base rate plus 0.90% introductory rate available for the first four months)
  2. 0.90% – CBA’s Netbank Saver (0.05% base rate plus 0.85% introductory rate for the first five months)
  3. 0.85% – Westpac’s Life* (0.40% base rate plus 0.45% bonus rate)
  4. 0.85% – ANZ’s Progress Saver (0.01% base rate plus 0.84% bonus rate)

Source: www.canstar.com.au – 18/09/2020. Based on savings accounts on Canstar’s database available for a deposit amount of $10,000 from the major banks. Includes flexible savings accounts that allow flexible access to balance whilst paying an interest rate and bonus savings accounts that pay a bonus rate when conditions are met each month. Top rate from each bank selected and products listed in descending order by total rate, followed by base rate. Total rate includes the base rate plus any applicable conditional bonus rate or promotional rate. Conditions may apply to bonus and promotional rates; contact the relevant company for full terms and conditions. *18-29 year olds can earn an interest rate of up to 3% on the Westpac Life account.

Top youth savings accounts from the big four

  1. 1.10% – Westpac’s Bump Savings (0.55% base rate plus 0.55% bonus rate)
  2. 1.05% – CBA’s Youth Saver (0.10% base rate plus 0.95% bonus rate)
  3. 0.95% – NAB’s iSaver* (0.05% base rate plus 0.90% introductory rate available for the first four months)
  4. 0.85% – ANZ’s Progress Saver* (0.01% base rate plus 0.84% bonus rate)

Source: www.canstar.com.au – 18/09/2020. Based on youth savings accounts on Canstar’s database available for a deposit amount of $10,000. Products listed in descending order by total rate. Total rate includes the base rate plus any applicable conditional or promotional bonus rate. Conditions may apply to bonus rates; contact the relevant company for full terms and conditions. *NAB iSaver and ANZ Progress Saver are available to all customers, not just under 18 year olds.

What are the top savings accounts rates available from any bank?

Rabobank currently offers the highest savings account interest rate for regular savers, and Credit Union Australia (CUA) for young people aged under 18, at 2% and 3% respectively.

Top savings accounts from any bank

  1. 2% – Rabobank’s High Interest Savings Account (0.55% base rate plus 1.45% introductory rate for the first four months)
  2. 1.90% – Heritage Bank’s Online Saver (0.80% base rate plus 1.10% introductory rate for the first four months)
  3. 1.65% – MyState Bank’s Bonus Saver (0.15% base rate plus 1.50% bonus rate)
  4. 1.65% – ING’s Savings Maximiser (0.10% base rate plus 1.55% bonus rate)
  5. 1.65% – HSBC’s Serious Saver Account (0.15% base rate plus 1.50% introductory rate for the first four months)

Source: www.canstar.com.au – 17/09/2020. Based on savings accounts on Canstar’s database available for a deposit amount of $10,000. Includes flexible savings accounts that allow flexible access to balance whilst paying an interest rate and bonus savings accounts that pay a bonus rate when conditions are met each month. Top five selected and products listed in descending order by total rate, followed by base rate. Total rate includes the base rate plus any applicable conditional bonus rate or promotional rate. Conditions may apply to bonus and promotional rates; contact the relevant company for full terms and conditions.

Top youth savings accounts from any bank

  1. 3% – CUA’s Youth eSaver (3% base rate)
  2. 1.90% – bcu’s scoot’s super saver (1.90% base rate)
  3. 1.80% – Newcastle Permanent’s Smart Saver Account for under 25 (1.80% bonus rate)
  4. 1.60% – Greater Bank’s Life Saver (1.60% bonus rate)
  5. 1.55% – Teachers Mutual Bank’s Mighty Saver* (0.10% base rate plus 1.45% bonus rate)

Source: www.canstar.com.au – 17/09/2020. Based on children’s savings accounts on Canstar’s database available for a deposit amount of $5,000. Top 5 selected and products listed in descending order by total rate, followed by base rate. Total rate includes the base rate plus any applicable conditional bonus rate rate. Conditions may apply to bonus rates, contact the relevant company for full terms and conditions. *Mighty Saver account also available from Firefighter’s Mutual Bank, Health Professionals Bank and UniBank.

 

This article was reviewed by our Sub Editor Jacqueline Belesky before it was published as part of our fact-checking process.

 

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