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?