The federal Treasurer wants answers from the banks over their lack of transparency on interest rate increases for savings accounts.
Treasurer Jim Chalmers has asked the Australian Competition and Consumer Commission (ACCC) to investigate if the banks are passing on a fair interest rate on savings accounts when interest rates rise, the Australian Financial Review reports.
“This is an issue I’ve asked the ACCC to take a closer look at this year,” Dr Chalmers said.
“Banks should treat their customers fairly when it comes to savings accounts.
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“People who rely on their savings bore the brunt of very low rates in the past and they should see the benefits of higher interest rates now. It should be the silver lining in all of this.”
If you have money in the bank, he says it’s time to shop around.
Many of the so-called ‘second tier’ banks, such as ING and Bank of Queensland, have raised their interest rates while the big four have been dragging their feet. CBA’s highest ongoing savings rate is 3.5 per cent, compared to BOQ’s offering of 4.75 per cent, according to financial comparison site finder.com.au.
However, it pays to read the fine print as several of the current high-interest deals seem to be targeting younger savers with many of the offers for under-35s only.
“If your bank isn’t giving you a fair deal, I’d encourage you to look around for a better offer,” Dr Chalmers said.
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He also encouraged consumers to access Consumer Data Right to compare interest rates.
Dr Chalmer’s threat to call the ACCC in on the banks sounds good, but will it achieve anything?
In 2019, then Treasurer Josh Frydenberg asked the ACCC to investigate why the banks were not passing on the full rate cuts to those with loans when rates were falling.
Not surprisingly, the ACCC found “maintaining profits” was a “major consideration” in the banks’ decision not to pass on the rate cuts.
However, the government then did not initiate or pass any legislation to improve consumer rights.
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Will this government be any different?
The Reserve Bank of Australia (RBA) meets every month except for January to review the official interest rate, with the next meeting set for 9 February.
In a press release after the December 2022 meeting, the RBA said that while inflation was expected to increase in the months ahead, it was then expected to decline for the rest of the year.
“The bank’s central forecast is for CPI inflation to decline over the next couple of years to be a little above 3 per cent over 2024,” the RBA said in the statement.
The board said its priority was to re-establish low inflation in the 2–3 per cent range over time.
However, it also said that while achieving a lower interest rate was the goal, it was not a “preset course” and it was closely monitoring the global economy, household spending and wages.
Does the banks’ lack of action on interest rates infuriate you? Do you shop around for interest rates? Why not share your tips in the comments section below?
“The RBA said that while inflation was expected to increase in the months ahead, it was then expected to decline for the rest of the year.
“The bank’s central forecast is for CPI inflation to decline over the next couple of years to be a little above 3 per cent over 2024,” the RBA said in the statement.
But who can believe the RBA? “Dr” Chalmers, has no experience in financial matters, as he is a “Dr” of Union Philosophy!! So what would he know about living standards, budgeting or anything financial?
“Dr” Philip Lowe – head of the Reserve Bank – “doesn’t think that anything he says is taken seriously” by everyday Australians.
Two clowns that have escaped the circus!!!
I agree with Dr Chalmers and contrary to Peter, I think he talks a lot of financial sense.
My wife and I had a five-figure sum in a term deposit with one of the majors we had been with for nearly 50 years. The deposit recent matured while we were away so they reinvested the full sum at the old low interest rate even though they were offering much higher rates for new term deposits. We demanded they cancel the new term and we moved most of the funds to another bank at double the best ‘new’ rate we could get from our bank and put the rest in a more liquid saving account still at nearly three times higher than the old term deposit rate. Also, with much higher rates on offer we closely watch our active online ‘cheque’ account and as soon as there is any surplus it gets moved to a higher rate with another bank.
Customer loyalty used to stand for something with banks but now its everybody for themselves.