The Recent Cuts To Savings Account Interest Rates

8 March 2017
Thirty institutions have cut interest rates on savings accounts since November 2016. Was your bank one of them?

While the past few months have seen interest rate hikes on many home loans (both fixed and variable), the same can’t be said for savings accounts.

Since November 2016, a total of 43 savings accounts (from 30 different institutions) experienced rate cuts, according to the CANSTAR database.

Of those that cut rates, the average size of the cut was 0.17%, while the maximum cut was 0.50%.

Which savings accounts rates have been cut?

In the table below are the all of the savings accounts that have experienced interest rate cuts since November 2016, according to the CANSTAR database.

Institution Product Name Total Rate (Base + Bonus/Promo)

(% p.a.)

Change Nov-Mar
ANZ Online Saver 2.65% -0.10%
Arab Bank Australia Online Savings Account 1.80% -0.10%
Australian Unity Easy Saver 2.80% -0.30%
B&E Personal Banking Serious Saver 1.50% -0.25%
Bank Australia Bonus Saver 2.60% -0.20%
Bank of Melbourne Incentive Saver Account 1.75% -0.10%
Bank of Melbourne Maxi Saver 2.75% -0.25%
BankSA Incentive Saver Account 1.75% -0.10%
BankSA Maxi Saver 2.75% -0.25%
BankVic Bonus Saver 2.40% -0.02%
BOQ Bonus Interest Savings 2.20% -0.10%
BOQ WebSavings Account 2.65% -0.10%
Catalyst Money Bonus Saver 2.25% -0.05%
Catalyst Money Saver 2.05% -0.05%
Citi Online Saver 2.85% -0.20%
Commonwealth Bank GoalSaver 1.80% -0.15%
Commonwealth Bank NetBank Saver 2.50% -0.20%
Defence Bank iSaver 2.40% -0.10%
ECU Australia Bonus Saver Account 2.65% -0.20%
ECU Australia e-Saver 1.95% -0.25%
Illawarra CU NSW Bonus Saver 2.25% -0.05%
Illawarra CU NSW Saver 2.05% -0.05%
Macquarie Credit Union Online Savings Account 1.70% -0.10%
MOVE – People Driven Banking Express Saver 2.40% -0.25%
MOVE – People Driven Banking First Home Saver Club Account 2.40% -0.25%
NAB iSaver 1.90% -0.10%
NAB Reward Saver 2.55% -0.15%
Newcastle Permanent Rapid Saver Statement 1.50% -0.50%
P&N Bank CashSaver Account 1.25% -0.20%
P&N Bank Hi Saver 2.75% -0.20%
P&N Bank SwiftSaver Account 2.00% -0.20%
Police Bank Bonus Saver Account 2.50% -0.25%
RaboDirect High Interest Savings Account 3.05% -0.15%
RAMS Saver Account 3.00% -0.15%
Rural Bank ONE Personal Saver 1.80% -0.20%
St.George Bank Incentive Saver Account 1.75% -0.10%
St.George Bank Maxi Saver 2.75% -0.25%
The Capricornian iSaver Account 1.60% -0.10%
The Mac eSaver 1.20% -0.10%
The Mutual Internet Saver Account 2.65% -0.20%
Westpac eSaver 2.51% -0.20%
Westpac Reward Saver 1.75% -0.10%
Woolworths Employees CU Netplus Account 1.25% -0.25%

Source: Canstar. Total Rates correct as at 1 March 2017. 

Losing money: Average interest rate is below inflation rate

The latest figures from the Reserve Bank of Australia (RBA) show that the average interest rate paid by banks on online savings accounts (excluding bonus interest) is 1.25%.

This is less than the current annual rate of inflation of 1.30%, which means that in “real” terms (inflation-adjusted), savers are losing money.

Think of it like this. The cost of goods and services are currently rising 1.30% per year (inflation), but on average, Australian savings accounts are only growing 1.25% per cent per year (in interest).

But savers can still shop around for a better rate.

Of the savings account on CANSTAR’s database, the maximum base rate on offer is 2.30% p.a., while the maximum total rate (base rate + bonus/promo rate) is 3.05% p.a..

This is reflected in our comparison table below, where we have provided a snapshot into the current market offerings for savings accounts with links direct to the providers website. Please note that this table has been formulated based on a regular saver with current savings of $1,000 in NSW, sorted by total interest including bonus (highest to lowest).


Why are banks cutting interest rates on savings accounts?

CANSTAR Research Analyst Joshua Sale earlier this year suggested that some of the cuts to savings accounts were a delayed response to the RBA’s rate cut back in August.

“Many institutions did not lower their savings account interest rates immediately following the August Reserve Bank cash rate cut,” Mr Sale said.

“The recent tranche of reductions could be seen as a lag from the change to the official cash rate, with institutions waiting for the dust to settle before re-balancing their books.”

Mr Sale added that while banking institutions appear less competitive with savings accounts, there’s still strong competition to provide consumers with a great “all-round banking” offering.

“This can be seen with institutions tinkering with both interest rates and features that they provide on other products such as home loans and transaction accounts,” Mr Sale said.

“There have still been some increases to savings account interest rates that are worth noting, but in the record-low interest rate environment that we are in, competition for savings accounts appears to have eased as investors seek yields elsewhere.”

CANSTAR is an information provider and in giving you product information CANSTAR is not making any suggestion or recommendation about a particular product. If you decided to apply for a savings account, you will deal directly with a financial institution, and not with CANSTAR. Rates and product information should be confirmed with the relevant financial institution. For more information, read our detailed disclosure, important notes and additional information.

The inclusions mentioned represent a selection of what is covered at the time of writing. Additional terms and conditions may apply to different features. Additional fees may apply to the product. CANSTAR is not making any suggestion or recommendation to you about this product. Please ensure that you read the product disclosure statement to determine all the current options and inclusions for the product you are considering.

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