The first RBA rate cut of the year is behind us, and already we’ve seen plenty of activity on the home loan front. But while reductions to official interest rates come as good news for mortgage holders, they’re less likely to be appreciated by the nation’s savers.
That’s because when banks make cuts to home loan rates, cuts to savings accounts usually follow. And with so many banks opting to reduce home loan rates by 0.25% this month, anyone who relies on interest on their savings for income has little to be optimistic about.
How have the big banks responded?
Among the major banks, Commonwealth Bank was the first to budge. Less than a week after we received word it will be slashing home loan rates by 0.25%, the big bank announced it will be cutting savings rates in kind.
Ongoing interest rates for the CommBank GoalSaver Account will now sit at 0.65% p.a. for balances less than $50,000, and 1.00% p.a. for balances between $50,000 and $249,000.
UBank, ING and ME also make cuts
A few days after the RBA’s decision, UBank announced it will be making cuts to its range of deposits. On 9 March, base rates for the Personal USaver, USaver SMSF and USaver Reach dropped by 0.25%.
That means the maximum rate customers will receive when pairing the USaver with the Ultra Transaction Account now sits at 1.85% p.a., assuming account holders meet the monthly bonus rate criteria.
According to UBank, the decision aims to “strike the right balance between delivering great value to our customers, responding to changing marketing conditions and managing our business sustainably.”
Elsewhere, ING has moved to cut rates for its Savings Accelerator and Business Optimiser by 0.25%. The Savings Accelerator will now offer rates of 0.75% on balances between $50,000 and $150,000, and 1.25% p.a. on balances above $150,000.
Citi was also among the first wave of banks to cut rates, slashing ongoing rates for its Online Saver account by 0.25%. As of 6 March, it will come with a 2.05% p.a. introductory rate, which lasts for four months before reverting to 0.60% p.a.
Rounding out the list are RaboBank and ME. RaboBank’s High Interest Savings Account will drop 0.25%, while its SMSF accounts will see larger reductions of 0.35%.
Meanwhile, base rates for the ME Online Savings Account will drop from 0.35% to 0.10% p.a. That brings the maximum rate savers can earn (by making at least four tap and go payments each month) down to 1.80% p.a.
Xinja keeps rates unchanged, halts customer inflow
Neobank Xinja raised a few eyebrows when it announced it won’t be dropping rates for its Stash savings account, but will be halting onboarding of all new customers for the time being.
CEO Eric Wilson said the decision to pause new accounts was the bank’s way of prioritising existing customers, who will continue to receive market leading rates of 2.25% p.a.
“When faced with higher than expected deposit flows, and an RBA rate cut, most banks would just drop deposit interest rates, hurting existing customers while chasing new ones. That’s not what Xinja is about,” he said.
Who offers the highest savings account rates?
While we’re still waiting on decisions from most banks to come through, it’s worth taking a look at where rates currently sit. Below are the top five best value savings accounts in our database at the time of writing.
|86 400||2.25% p.a.||Save Account||Deposit $1,000+ per month|
|Up||2.25% p.a.||Saver Account||Make 5+ card purchases per month using a linked Up debit card|
|Volt||2.15% p.a.||Savings Account||None|
|BoQ||2.00% p.a.||Fast Track Saver Account||Deposit $1,000+ and make 5+ eligible transactions with linked account|
|Australian Unity||2.00% p.a.||Active Saver||Deposit $250+ and make no withdrawals in the month|
If your bank has made cuts and you’re wondering how the new rates stack up against other accounts on the market, be sure to visit our savings account comparison page for an overview.
Savings account comparisons on Mozo - last updated January 16, 2021
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