Big banks bow to savings rate pressure

Three of the big four banks have today increased key savings rates by significantly more than last week’s 0.25 percentage point increase from the RBA, as the spotlight continues to shine on deposit rates.

Big four banks CBA and NAB have today increased the ongoing rates on key savings accounts by up to 0.75 percentage points, as previously announced on the back of the February cash rate increase.

Last week, ANZ announced it would lift just one savings rate on the back of the RBA decision - its Plus Save account by 0.25 percentage points. 

Today, however, the bank has decided to increase the ongoing rates on its two main savings accounts, the Progress Saver by up to 1 percentage point and its Online Saver by 0.25 percentage points.

Westpac’s savings rate changes are not due until Tuesday although at this point, the bank has only announced select increases of up to 0.25 percentage points.

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How the banks’ savings rates stack up

While some banks have increased rates beyond the RBA’s 0.25 percentage point rise this month, what ultimately matters is what rate customers are receiving on an ongoing basis.

Customers should be aiming for an ongoing interest rate that’s at least 4 per cent, while keen savers can now get ongoing rates of up to 4.80 per cent.

On this measure, a number of the big four bank savings accounts continue to fall short.

Big four bank savings account rates – today vs before the rate hikes

Source: RateCity.com.au. Data accurate 17/02/2023. *Westpac rate effective 21/02/2023.

Highest ongoing savings rates

Excludes kids and young adult savings accounts

Source: RateCity.com.au. Data accurate 17/02/2023.

Interest earned on $25,000

Source: RateCity.com.au. Assumes terms and conditions are met to qualify for rate. Does not include potential rate changes or include any additional deposits.

RateCity.com.au research director, Sally Tindall, said: “The big banks might have pulled their socks up this month but that still doesn’t mean every one of their savings customers is now on a cracking rate.” 

“In fact, the imbalance is amplifying as the proactive customers bask in extra interest, while millions of sedentary savers continue to trail behind,” she said. 

“ANZ has today upped the ongoing rate for its Online Saver customers from 0.60 per cent to a laughable 0.85 per cent – almost four times below the current cash rate. 

“For someone with $25,000 in this account, they’re in line for a measly $63 extra a year, yet if they switched to an ongoing rate of 4.5 per cent or more, they could increase their interest by a further $935, provided they meet the monthly terms and conditions.

“Savers who don’t like jumping through hoops aren’t going to nab a market-leading ongoing rate, however, there are now a handful of relatively competitive accounts without any pesky monthly terms and conditions,” she said.

Highest ongoing savings rates with no monthly terms and conditions ($50K balance) 

Source: RateCity.com.au. Data accurate 17/02/2023. Macquarie ongoing rate effective 23/02/2023.

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