Commonwealth cuts rates in new blow for savers

COMMONWEALTH Bank has given a blow to savers by cutting rates on deposit accounts.

Recent interest rate carvings by the Reserve Bank have forced the country’s largest bank, under CEO Matt Co myn, toc lip savings rates on several deposit accounts, including its kids’ Youth Saver, which is commonly associated with CB A’ s school Dollar mites program.

On November 3, the RBA lowered Australia’s cash rate by 15 basis points to 0.1 per cent as part of its economic monetary policy response to the coronavirus-induced recession.

However, the knife taken to its youth-savings product is larger than the RBA’s recent rate cut, with the major bank slashing its Youth Saver by 20 basis points to 0.8 per cent for balances less than $50,000. Balances over $50,000 hold an ongoing rate of 0.05 percent.

CBA since the start of the year has cut savings rates eight times.

Savings products are heavily used by retirees who treat accrued interest as income.

The bank has shaved 15 basis points from its standard Net Bank account, which now has an introductory rate of 0.6 per cent before converting to an ongoing rate of 0.05 per cent.

Its conditional GoalSaver account has also been clipped, with the savings rate on balances over $50,000 being cut by 20 basis points to 0.8 per cent, while balances under $50,000 attract a new ongoing rate of 0.45 per cent. Canstar finance executive Steve Mickenbecker said CBA was the ninth bank to slash rates on deposits accounts since the RBA’s recent cut.

“This time the cuts are bitesized chunks between 0.10 per cent and 0.20 percent, just like the other seven cuts this year, but in all they add up to a main-course-sized 1.05 per cent reduction ,” he said.