Consumers warned not to pay 'lazy tax' as NAB cuts savings rates

National Australia Bank reduced interest rates for savers today, joining a list of ten providers on Canstar’s database to slash savings over the past week. One expert warns consumers just can’t afford to be lazy with their money anymore.
NAB savings rate cut 30 July 2020
NAB cut savings account and term deposit interest rates on 30 July, 2020. Image source: Rob Bayer, Shutterstock.

NAB reduced the introductory and bonus interest rates on its iSaver and Reward Saver accounts today by 0.10 percentage points, but left base rates unchanged. The new rates are:

  • NAB iSaver: 0.95% (0.05% base rate + reduced introductory rate of 0.90%)
  • NAB Reward Saver: 0.90% (0.05% base rate + reduced bonus rate of 0.85%)

The bank also cut a number of term deposit interest rates by up to 0.10 percentage points.

Commonwealth Bank, Westpac and its subsidaries, ING and neobank Xinja are among the providers to have made cuts to savings accounts or term deposits in the last week.

ANZ is now the only one of the big four banks not to have reduced its savings and term deposit rates in recent days.

Canstar money expert Effie Zahos said while we’ve seen inflation go backwards, we’ve also seen interest rates do the same, so consumers shouldn’t get too comfortable.

“We really need our money to earn a decent return to keep up with the cost of essentials such as groceries and household bills,” Ms Zahos said.

The latest figures from the Australian Bureau of Statistics showed consumer prices declined by 1.90% in the June quarter – the biggest quarterly drop in history. But this result largely came down to a three-month period of free childcare (which has now ended) and a sharp fall in fuel prices, she said.

“Many would see this as good news, as things don’t cost as much so you may not need as much to get by, though I suspect you’re still wanting your money to be working for you,” Ms Zahos said.

She said the low interest-rate environment meant there wasn’t much wiggle room for lenders to offer high savings rates like we’ve seen in the past, so consumers needed to proactively go after the top rates.

↓ Keep reading to find the highest savings account interest rates on our database today

Savers’ rates are being reduced as banks cut into their own margins to compete for the lowest home loan interest rates, which were now down to record lows of less than 2% in some cases.

“We can no longer afford to pay a lazy tax,” she said.

“Those keen on going after the top savings rates will have to be willing to chase promotional rates.

“The alternative is to dial up the risk and invest in other asset classes, but the downside of course is that they don’t come with government backed guarantees.”

Australian banks, building societies and credit unions that are authorised deposit-taking institutions (ADIs) have their customer’s deposit accounts guaranteed up to $250,000 by the government as a type of safety net in the case that ADI failed.

What are the top savings account rates?

The top savings account rates on Canstar’s database at the time of writing are:

  1. 2.25% – Rabobank’s High Interest Savings Account (0.80% base rate + 1.45% promotional rate for four months)
  2. 2.20% – Heritage Bank’s Online Saver (0.80% base rate + 1.40% promotional rate for four months)
  3. 2.10% – HSBC’s Serious Saver Account (0.15% bonus rate + 1.95% promotional rate for four months)
  4. 2% – Macquarie Bank’s Savings Account (1.35% base rate + 0.65% promotional rate for four months)
  5. 1.75% – Australian Unity’s Active Saver (0.25% base rate + 1.50% bonus rate)

Source: – 30/07/2020. 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 5 products selected and 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.

The comparison table below shows some of the Savings Accounts on Canstar’s database for a regular saver in NSW with links to the providers’ websites. The results shown are based on an investment of $100,000 in a personal savings account and are sorted by Star Rating (highest to lowest), then provider name (alphabetically). For more information and to confirm whether a particular product will be suitable for you, check upfront with your provider and read the Product Disclosure Statement before making a decision.

This article was reviewed by our Sub-editor Tom Letts before it was published as part of our fact-checking process.

Follow Canstar on Facebook and Twitter for regular financial updates.

Share this article