By John Collett
Westpac, NAB and ANZ have passed on the 0.25 percentage point increase in official interest rates to their bonus saver accounts.
However, Commonwealth Bank, Australia’s largest bank, is still sitting on its hands, despite joining the other big banks in passing on the rate increase in full to its variable-rate mortgage customers.
It is understood CBA intends to increase the interest rate offered on its NetBank Saver accounts, though it is unclear if existing customers would reap the full benefits.
CBA is offering an 18-month fixed-term deposit special, with an interest rate of 2.25 per cent, for balances of between $5000 and $2 million, effective May 13.
RateCity research director Sally Tindall says CBA’s term-deposit special is well above the rates the big four are offering on 1- and 2-year term deposits. Still, it falls well short of the best-paying term deposit rates.
Figures from RateCity released on Friday show Judo Bank pays the highest 1-year term deposit rate of 2.7 per cent, and the highest 2-year term deposit rate of 3.5 per cent.
Macquarie Bank is paying 3.3 per cent for two years and AMP is paying 3.25 per cent for two years, or 3.3 per cent on balances of more than $25,000.
Tindall says Australian households now have more than $1.26 trillion saved with banks – an increase of $272 billion from February 2020, before the onset of COVID-19.
“The big banks are bursting at the seams with cash. As a result, they may be unwilling to pass on the [latest interest rate] hike to all savings customers,” Tindall says.
With headline inflation recorded at just over 5 per cent for the 12 months to March 31, even with the increase in savings rates of 0.25 percentage points, bank customers are still losing money, in real terms.
Retirees, who often rely on interest from bank savings to help meet their living expenses, have been hit hard by the poor returns on their cash.
“It will be a long time before average savings rates catches up to inflation,” Tindall says.
Bonus saver accounts pay the maximum interest rate provided certain conditions are met, otherwise the rate is a much lower base level. Conditions may include a requirement to grow the balance of the account each month, or make no withdrawals.
Westpac’s Life and NAB’s Reward Saver pay 0.5 per cent interest and ANZ’s Progress Saver pays 0.4 per cent. These higher rates take effect later this month.
CBA’s GoalSaver maximum rate is unchanged at 0.25 per cent.
“The big banks’ savings rates are well below their competitors,” Tindall says.
RateCity’s figures show the best bonus saver rates are offered by ING Savings Maximiser, AMP Bank Saver Account and Virgin Money Boost Saver – all pay a maximum rate of 1.35 per cent.
The best of the bonus savers for young adults is Westpac Life (18-29 year) that pays 2 per cent on balances up to $30,000, and BOQ Future Saver (14-35 years) that pays 2 per cent on balances up to $50,000.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.