Two of the nation’s largest banking groups have swung an axe at savings rates, adding further pain to Australians attempting to build their wealth.
Both Westpac and the Commonwealth Bank on Friday shaved rates on standard and conditional deposit accounts to levels below 0.5 per cent.
Westpac has clipped its standard eSaver account by 15 basis points. It now attracts a five-month introductory rate of 0.4 per cent before reverting to an ongoing rate of 0.05 per cent.
The bank’s conditional Life account has also been shaved by 15 basis points to a maximum rate of 0.4 per cent.
The bank, however, has left its market-leading 3 per cent rate for people under the age of 30 untouched.
CBA slashed the five-month introductory rate on its standard Netbank Saver by 5 points to 0.45 per cent. The ongoing rate is 0.05 per cent.
The bank’s conditional goal saver account has been lowered to a maximum rate of 0.45 per cent.
RateCity research director Sally Tindall said the cut was yet another blow to savers who were already receiving a pittance on interest returns from their cash investments.
“Savers are the biggest casualties in this low-rate environment, particularly those who rely on the interest they earn from their nest eggs,” Ms Tindall said.
“Right now the average ongoing savings rate on our database is a paltry 0.39 per cent, but if you’re prepared to shop around you could find a rate three times higher.”
Accrual rates for savings products have been hit hard by the ongoing low-interest rate environment brought on by the coronavirus pandemic.
The Reserve Bank of Australian cut the official cash rate twice in March following the onset of the COVID-19 lockdown and then cut the rate again to 0.1 per cent in November.
Low interest rates place downward pressure on banks’ deposit books and force them to drop savings rates to limit the number of outgoing interest expenses.
Both banks have also cut the rates applicable to youth saving accounts.
Westpac subsidiary St George has also slashed rates on savings products.
“It’s particularly hard for kids in the Dollarmites program who have little choice than to stick with CBA if they want to keep banking at school,” Ms Tindall said.
“Right now these kids are earning just 0.70 per cent on their savings. On a savings of $500 that’s barely going to get them an ice cream each year.”
National Australia Bank is offering a maximum conditional savings rate of 0.55 per cent and a four-month rate on its standard saver of 0.6 per cent.
ANZ’s maximum conditional rate is 0.5 per cent and its standard savings product attracts a three-month starting rate of 0.45 per cent before changing to an ongoing rate of 0.05 per cent.