Banks penny pinch with savers’ rates

SAVERS are suffering as big banks slash interest rates on basic accounts.

One in five savings accounts no longer pays interest unless the balance is above a certain level.

Macquarie will stop paying interest on balances under $5000 in its cash management accounts on January 1.

ANZ and Commonwealth Bank and more than 20 other financial institutions are playing Scrooge with people’s savings.

“Savers really need to be careful about signing up for these sorts of accounts,” said Kirsty Lamont, of comparison website Mozo.com.au.

“Over the past couple of years we have seen banks introduce more and more stringent conditions for savers — it’s becoming harder and harder for savers to earn decent interest rates without having to meet a ton of conditions.”

Mozo’s research found 30 out of 169 cash management accounts and other savings products on its database were affected by no-interest rules.

“You would find many older Australians could have their cash tied up in these sort of accounts,” Ms Lamont said.

There are no official figures showing how many accounts are affected, but Macquarie suggests its cash management accounts are used by almost 200,000 selfmanaged super funds.

A Macquarie spokeswoman said the bank was changing the rules “following a review”.

“As occurs elsewhere, interest won’t be applied for CMA balances under $5000,” she said.

Macquarie’s CMA “stepped interest rate” for balances over $5000 is 1.3 per cent. This means a saver with $10,000 receives interest of 0.65 per cent because nothing is paid on the first $5000.

Research group Canstar found 29 out of 55 cash management accounts paid no interest below certain balances, and 14 of 78 online savings accounts had the same rule.

Canstar’s Steve Mickenbecker said it was surprising to see restrictions on online savings accounts.

“They’re a low-cost account for the institutions and there’s no good reason for them not providing interest for low balances,” Mr Mickenbecker said.

Banks were hitting savers to help fund home loans, which were “incredibly competitive” for owner-occupiers, he said.