‘Dire situation’: Aussies hurt as banks slash savings rates

Australians will be feeling the pinch financially, after two major banks just slashed their savings rates, data from Canstar revealed.

Commonwealth Bank of Australia (CBA) cut its introductory rate on its NetBank Saver account by 0.05 per cent, and slashed the bonus rate on its GoalSaver account by 0.05 per cent for balances of $50,000 or more.

CBA also cut the bonus rate on its Youthsaver saving rate by 0.10 per cent.

While the changes don’t translate to a huge dollar amount in your savings - just $2 for balances of $10,000 or $26 for balances of $50,000 - Canstar’s editor-at-large, Effie Zahos, said the pandemic has exacerbated financial stress.

“A cut to deposit rates right now will be felt pretty hard by anyone financially impacted by the pandemic, people saving for their first car or first home, and many retirees,” Zahos said.

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National Australia Bank (NAB) also cut its savings rate by between 0.05 per cent and 0.15 per cent for its term deposits.

Now, 50 per cent of savings accounts and 80 per cent of term deposits on Canstar’s database have a total savings rate of less than 1 per cent.

That’s particularly bad news for retirees, exacerbated by the fact that nearly half of all companies that have reported their earnings so far have cut or reduced their dividends.

“The income from a ‘low-risk’ term deposit cannot meet their cost of living, sending their capital on a downward spiral,” Martin Currie investment team stated.

And with dividends slashed, older Australians are even more vulnerable.

“This is a dire situation,” the investment firm stated.

My savings rate has been slashed. What can I do?

When one door closes, another door opens. Or, rather, when one lender is cutting rates, another is offering a better deal, according to Zahos.

“Banks are seeing their margins squeezed, some banks aren’t paying dividends and others are trying to offer higher rates in a low rate environment,” Zahos said.

“Anyone with a savings goal or those wanting to stash away emergency funds need to be prepared to play leap frog and jump around to chase the better rates.”

Currently, Heritage Bank is offering around 0.80 per cent on its base rate, and a 1.40 per cent promo rate for a period of four months.

That brings the total rate to 2.20 per cent.

Macquarie Bank is offering 1.35 per cent on its base rate, and VOLT bank is offering 1.65 per cent.

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