Savers lose $1.6bn in interest as banks whittle rates

SAVERS have been dudded a massive $1.6bn in interest as the banks continue to slash savings accounts’ rates across about 1500 products.

Some of the nation’s largest banks are offering paltry returns as low as 0.05 per cent on cash deposits, giving savers good reason to park their cash elsewhere.

The Reserve Bank of Australia board kept the cash rate on hold on Tuesday at 0.25 per cent but analysis by financial services firm Mozo showed many savings accounts’ rates interest were now closer to zero per cent.

Last week, the nation’s largest bank – the Commonwealth Bank – dropped the special introductory rate on its popular Netbank Saver account by 0.05 basis points to just 0.9 per cent.

This is the honeymoon rate for the first five months before it plummets to 0.05 per cent.

Mozo’s Kirsty Lamont said banks had kept “trimming rates over a long time”.

“Savers have missed out in $1.6bn in interest over the past six months but many savers won’t have noticed because they are dropping by very small amounts,” she said.

“It’s a wake-up call for savers to take the time to check the rates they are earning because they may be very surprised to see them drop.”

The $1.6bn in lost interest is based on the average ongoing savings rates falling from 0.97 per cent to 0.65 per cent in the past six months, and this is applied to the nation’s $1.03 trillion in household deposits.

Australian Bureau of Statistics data this week showed in the June quarter housing savings to income ratio rose from 6 per cent to 19.8 per cent.

Ms Lamont said despite low rates being good for those paying down debts, it continued to hit hard those who rely on saving returns, including retirees.