Banks do the dodgy on loyal customers

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The Big Four banks snuck the gift of an interest rate rise into the Christmas stockings of potential new customers, but proffered a lump of coal to loyal, long-term account holders.

Earlier this month, CommBank, National Australia Bank (NAB) and Wetspac cut interest rates on savings accounts, after ANZ started the ball rolling in December.

Many loyal customers are now earning less than one per cent on their savings.

With the threat of the royal commission looming, banks sneakily introduced the rate cuts to base accounts – accounts held by long-term customers – yet raised interest earned on introductory accounts being offered to new customers.

This was done to attract less public scrutiny. The banks cut the rates in order to save money, but are still able to advertise attractive headlines of ‘increased rates’ to the marketplace.

The base account rates are now 0.5 per cent at ANZ Bank and 0.8 per cent for the remaining three banks.

These cuts may seem minor, but they will have the most negative effect on older Australians who rely on the interest earned from savings accounts. In a time where the cash rate hovers around a record low, any interest returns are seen by long-term savers as precious. These new cuts will mean millions are lost to savers and, instead, kept in banks’ coffers.

Banks claim the cuts are necessary due to “credit growth expectations and competitive pressures”. They are encouraging savers to put their money in long-term deposits – effectively locking up the funds for the banks to ‘play’ with while reducing customers’ access to their savings.

The alternative is to put money into introductory accounts and move it to another when the special rates expire.

NAB says its new rates reflect the conditions of the market and its products “balance the needs of all of our customers and stakeholders, and take into account economic and market conditions”.

It could be argued that the needs of one are being looked after more than the other.

Were you aware that your savings interest rates were cut over the summer? Is there no reward for loyalty? Will you switch banks to send a message to yours?

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Written by Leon Della Bosca

Leon Della Bosca is a voracious reader who loves words. You'll often find him spending time in galleries, writing, designing, painting, drawing, or photographing and documenting street art. He has a publishing and graphic design background and loves movies and music, but then, who doesn’t?

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54 Comments

Total Comments: 54
  1. 0
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    I have been with N A B since the seventies and do not have so much as 1 brownie point, Banks remove A T M fees and lower interest rates. Its all smoke and mirrors banks don’t give back..
    o surprises

  2. 0
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    They are banking on us not caring enough to do the work and walk across the road.
    I have had a long association with my current bank.
    I will ask the manager what is my current interest rate on savings.
    If it has gone down or is less than the competition, I will give the Manager the option.
    If they dont match the introductory rate of the opposition, goodbye.
    We are talking several loans and a few cash deposit accounts with six-figure amounts.
    Will they still say no?

    • 0
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      walk across the road to what, they are all deep inside each other’s pockets, and collude to ensure that they are the only banking services we have access too, I am sure the ultra rich can bank whereever they feel like and from all reports send their money offshore so as to pay no tax.

  3. 0
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    Changing all your arrangements just to save a few dollars only to subsequently lose them again does not make much sense to me. Of course should you have a couple of hundred thousands to spare you might think differently. The difference in credit card interest is more visible than earnings on everyday accounts.

    • 0
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      Yes, you are right on both counts Jim.
      But its also about sending a message.
      Many years ago Commonwealth Bank said to me “Here’s a $3000 loan. No interest, as long as you pay it back within 55 days.”
      Always have. Never paid any interest on my credit card.
      I only put stuff on my credit card that I know I can pay for within 55 days.

    • 0
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      Spot on there “On the Ball”, we do the same, we put $30,000 through our single credit card in a year and pay not one iota of interest on it.

  4. 0
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    Bloody disgrace, I do not have much only the savings which I place there for Rego etc.
    I will be changing my bank to Suncorp soon so really don’t care about the NAB

    • 0
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      Well, Suncorp just closed their branch near me and now I have to take the bus to the next town. Once they went to ReadyATM they
      started to close down their own ATMs. I have been with Suncorp since building society days.

  5. 0
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    False post to get this page to email me when comments are made. NOTE to YLC moderators/developers – allow the check box “Email me when comments are made to this article” to be activated WITHOUT posting a comment !

  6. 0
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    What is really disgusting is that the Federal Government is still using unrealistic deeming rates and an effective deeming rate of 7.8%+ applied to those with assets above relatively conservative thresholds (at least for younger retirees who may have up to 3 decades of rising prices and increasing health needs to contend with).

    When will this stinking government recognize reality and adjust the rules to introduce some level of fairness.

    • 0
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      as a pensioner, I think it disgusting how our masters bash the needy and then use every trick themselves, they should deem that they are earning interest in Australia, the deeming rate is another attack on our freedoms, and banks do not offer proper deeming rated accounts any longer, if the government was serious they would ensure that the banks supported what force upon the defenceless.

    • 0
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      My bank offers a “proper” deeming rate account – check out the Pension Access account offered by Australian Military Bank.

    • 0
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      Vote out the LNP mongrels at the next election.

    • 0
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      Rainey, not sure where you get your info from… google deeming rates:

      Asset value thresholds, effective from 1 July 2017: Singles: The first $50,200 of a person’s financial investments are deemed to earn income at 1.75% pa (deeming rate effective since 20 March 2015) and any amount above $50,200 is deemed to earn income at 3.25% pa (deeming rate effective since 20 March 2015)Jun 22, 2017

      Cheers

    • 0
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      Don’t worry Rainey, once Shifty Shorten becomes PM we will be living in Utopia.

    • 0
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      “Shifty” Shorten is infinitely preferable to Shithead Turdball and his troop of inept, soppy overprivileged wankers.

    • 0
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      THIS stinking government?? More like; ANY stinking government.

  7. 0
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    Been with the Commonwealth Bank for years and I shall now be looking else where, but I’m thinking pensioners are sitting ducks, easy targets, so not expecting any fairness. Didn’t realize that retirement was going to be like having a job and taking up so much time fighting to keep hold of my hard earned money from those clever wheeling-dealing schemers. Wish I had the taste for caviar and champagne and I wish it was healthy, as I would spend up big.

    • 0
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      I have done that in a half-hearted way and what I found out supported my belief all banks do the same and there is absolutely no difference in the way people and pensioners are treated, it is nothing but hornswoggle the statement that you can move to a better account, sure we might be able too if we are able to bank overseas like the rich.

    • 0
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      I moved to a better account – – check out the Pension Access account offered by Australian Military Bank.

  8. 0
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    Support your local Credit Union have done for years.

  9. 0
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    I know the solution. Here it is step by step……..

    (1) About 10 VERY well known, influential Aussies need to form a group for publicity purposes and to get the ball rolling

    (2) They then formulate a VERY simple plan. The plan is —- get as many Aussies as possible to totally desert 1 (just 1) of the big four banks, in other words place all their money and dealings in any of the 3 other big banks or elsewhere. That’s it. The bank to be deserted will be chosen (via 1 ball chosen from 4 balls in a hat) after 1 month of the inevitable massive media publicity. The plan is then put into action, and people begin withdrawing from the chosen bank.

    (3)Result: Immediately the chosen bank will be in the middle of a financial meltdown (but Australia as a whole won’t suffer because the money will still be in Australia (just in other banks).

    (4) Then what? One month later, an ultimatum is issued to the remaining 3 banks “lift your game or one of YOU are next”. Result = amazingly the 3 banks will suddenly out of thin air announce AMAZINGLY beneficial terms and conditions to thousands of products, things that will actually benefit the “customer” to a MUCH greater extent than what’s currently offered.

    (5) What will happen to the original chosen bank? They’ll recover and then in order to not go bankrupt they’ll start treating the customer with the same respect as the other 3 banks are now treating their customers.

    Problem solved.

    • 0
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      Actually Jim if we could organise we would be an amazingly powerful group and all the pensioner bashing would stop immediately.

      I suggest something like a powerful new lobby group.

      It seems others can do so.

      The power of boycott is incredible if directed and supported.

    • 0
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      Yes, Rae. We should unite, but unfortunately there is too much self-interest among retirees and the politicians are brilliant at taking advantage of that to create division. Look at how they used the politics of envy to get support for the assets test change. Told blatant lies, but by chanting ‘millionaires shouldn’t get pensions’ they got all the poorer pensioners up in arms about so-called ”greedy wealthy people” getting part pensions. These same pensioners seemed to fail to notice that the claimed savings were given to people with hundreds of thousands, and not a cent to the really needy. But they are still raving on about not having hundreds of thousands, ignoring the fact that many who do are actually worse off than pensioners unless they draw on their savings until they are poor.

      Then we have the magnanimous self-funded screaming that pensioners should have to forfeit their houses as repayment for pension income and shouldn’t be allowed to leave their hard-earned assets to offspring (despite the greedy screamers demanding that obscene tax concessions continue, over-indulging them and building massive piles of assets for their heirs to inherit!)

      If all retirees would stop thinking about their own situation and recognize that a concerted campaign for a fair, common sense overhaul of the system would benefit EVERYONE, we could unite to force positive change. With the right message, we could even win the support of younger Australians. A properly designed system would benefit EVERYONE.

  10. 0
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    Rainey, the deeming rates are disgusting. The government seems to think all retirees are earning high interest rates having their money in super or stocks and shares. Not wanting to have all my eggs in one basket and not wanting the government to force me into gambling on the stock market, which I haven’t got the head for, means a large part of my savings is earning peanuts.

    • 0
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      Yes Careworn, and here lies an example of what I posted the other day. The ‘welfare savvy’ know that for every $1000 held above the asset threshold, the age pension is reduced by $3 per fortnight or $78 per year. So if you have Money above the asset threshold then draw it out and spend it, or ‘invest’ it at home (under the mattress) and it will effectively provide an interest rate of 7.8%. I imagine that there are many people doing the latter. Stupid rules lead to creative solutions – and who can blame them.

    • 0
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      Financial adviser told me up to 98% of those affected by the assets test changes are spending hundreds of thousands either cruising and on luxuries or upgrading to luxury homes. ALL will need much larger pensions in years to come because of this IDIOTIC short-sighted policy change. Plus, younger folk are reducing their savings because they see that there’s no benefit from saving. Aged pension costs will soar, but I guess the politicians who acted so stupidly won’t care. They will have retired on massive taxpayer-funded pensions for life.

    • 0
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      Rainey, I can’t help wondering if getting the pensioners with ‘lazy fluid assets’ to help drive economic growth was the driver of the policy. If we think back to pink bats and other economy kick starts including the Keating “Can’t kick a dead horse back to life banana republic!” The intent has been to get more money circulating. The ultra low interest rates have got nowhere else to go, so what to do? Imagine if we could get the pensioners sitting on nest eggs to spend, spend spend. How can we do that? I know …… And here we are, they did it. Do they care about tomorrow? Of course not. Idiots is being kind – destructive unethical morons is more descriptive.

    • 0
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      *Imagine* I thought that was the point, to help drive economic growth, make them look good now and to hell with the future – because that won’t be their problem. I’m sure I had read that somewhere a long time ago – maybe it was just my thoughts.

    • 0
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      Yes Greg, a pity the policy makers didn’t look further than the thought bubble though. Much of the money spent by the pensioners is on Cruises aboard foreign ships. Other money is spent on overseas travel supporting tourism in foreign countries. Then there is the import of foreign luxury cars and other goods. On top of this is the destructive effect on individuals and as Rainey points out, the ‘hangover effect’ of increased government support when the honey pot is empty. I don’t pretend to have all the answers, that is why we pay top dollars to those who believe that the they do. Unfortunately, they don’t do much better, and we are heading for a bigger national debt because of it. It would be funny (as in sitcom Utopia) if it was not so sad.

    • 0
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      Careworn,

      1.75% excessive? Don’t think so.

      Asset value thresholds, effective from 1 July 2017: Singles: The first $50,200 of a person’s financial investments are deemed to earn income at 1.75% pa (deeming rate effective since 20 March 2015)

      and any amount above $50,200 is deemed to earn income at 3.25% pa (deeming rate effective since 20 March 2015)Jun 22, 2017.

      Rabobank offer 3.05%
      AMP 3.00%

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