Fresh blow for savers as CBA wields axe

THE Commonwealth Bank has delivered a stinging blow to savers, cutting interest rates on key accounts – in some cases further than its reduction to home loan rates earlier this month.

It has followed other major banks in slashing its savings rates in the wake of the Reserve Bank’s cut this month to the cash rate.

Savers will again have to tighten their belts after the CBA reduced its savings rates by up to 0.25 percentage points.

Australia’s biggest savings bank has cut in half the interest rate on its popular NetBank Saver online savings account.

The CBA is now offering an ongoing rate on NetBank Saver accounts of just 0.15 per cent – down from 0.3 per cent.

That rate takes effect following a five-month honeymoon rate on new accounts of 2.05 per cent, down from 2.2 per cent.

At 0.15 per cent, the ongoing rate is far short of inflation, which is running at 1.3 per cent a year.

The CBA has also cut the maximum rates on its GoalSaver accounts by 0.2 percentage points to 0.25 percentage points, depending on balance.

Those rates only apply for customers who deposit at least $200 a month and make no withdrawals – otherwise they receive a rate of just 0.01 per cent.

The CBA is the nation’s biggest savings bank, with more than about $265 billion in deposits from households and a total deposit pool of about $530 billion.

RateCity research director Sally Tindall described the rate cuts as another blow for savers.

“CBA has cut some of its savings accounts by just 0.15 per cent while others have been slashed by up to 0.25 per cent,” she said.

“CBA cut the majority of its variable home loan rates by just 0.19 per cent so it’s disappointing to see some cuts to savings accounts have gone above this.”

For GoalSaver customers with balances below $50,000, their maximum rate has been cut 0.25 percentage points to 1.15 per cent.

Last month, the CBA cut the maximum rates on its GoalSaver account by 0.2 to 0.3 percentage points.

Other big banks also cut their savings rates last month and again this month.

National Australia Bank earlier this month cut its iSaver rate to 0.11 per cent, while ANZ cut the rate on its Online Saver to 0.15 per cent.

Both online savings accounts offer a much higher introductory rate, NAB offering 2.11 per cent for the first four months and ANZ 1.95 per cent for the first three months.

Westpac cut its eSaver interest rate to 0.15 per cent ongoing, following an introductory rate of 2.16 per cent for the first five months.

“Now is an excellent time to review your savings accounts and see if you are getting the most bang for buck in what is a very difficult market for savers,” Ms Tindall said.

According to RateCity, Endeavour Mutual Lifestyle Account offers savers the highest interest rate of 2.75 per cent, but that requires at least $400 in deposits each month and savers must be aged 35 or younger. The Rams Saver account offers 2.55 per cent, as long as savers deposit at least $200 a month and make no withdrawals.

On July 2, the RBA cut the cash rate to a new record low of 1 per cent earlier this month, with a further cut widely expected before the end of the calendar year.

The four major banks have already cut their five-year term deposit rates by between 0.35 percentage points and 0.85 basis points since January 1, according to RateCity.

The Australian