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Commonwealth Bank has shaved savings rates at twice the level prescribed by the Reserve Bank of Australia.
The country’s largest bank has taken a knife to savings rates yet again, slicing five basis points from its standard NetBank Saver, which now attracts an introductory five month offer of 0.45 per cent. The account then reverts to an ongoing rate of 0.05 per cent.
The RBA cut the cash rate by 15 basis points to 0.1 per cent in November 2020 in an attempt to ease economic pressures sparked by the coronavirus pandemic.
Since the RBA’s decision, CBA has cut standard and conditional savings accounts between 30 and 35 basis points — twice the rate handed down by the central bank.
“There has been a disconnect between the Reserve Bank’s cash rate and savings interest rates over the past year, with reductions to savings accounts at the big banks averaging around 111 basis points as the cash rate fell 65 basis points,” Canstar executive Steve Mickenbecker said.
CBA cut rates twice in October before the RBA had even made a decision to lower its monetary policy settings.
Canstar said over the last year CBA had cut its standard saver 11 times and shaved 1.2 per cent worth of interest from customers – equating to $50 in lost earnings on a balance of $10,000.
RateCity research director Sally Tindall said CBA was thinking about its bottom line and trying to limit the amount it had to pay out in deposits.
“The bank has to offset its record low home loan rates with rock-bottom rates for savers,” Ms Tindall said.
“Thankfully, today’s Netbank Saver cuts are to its honeymoon rate, and it’s hard to think people will flock to an account that starts at 0.45 per cent and drops to just 0.05 per cent after the first five months.”
Savings products have been hit hard by the ongoing low interest rate environment brought on by the coronavirus pandemic.
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.
ING is offering the highest ongoing rate at 1.35 per cent; however, savers under 30 can obtain a lucrative rate of 3 per cent at Westpac.
“If you’ve got money in the bank, check your interest rate today and compare it to what other banks are offering. Just because savings rates are at their lowest doesn’t mean you should give up,” Ms Tindall said.
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