Savings account rates offering lower earnings
(27 May 2013 – Australia) Savers benefiting in recent years from relatively high rates on term deposits and online savings accounts may start noticing interest rates on a range of savings accounts falling faster than the official cash rate.
The "war for deposits" has eased since the Reserve Bank of Australia (RBA) cut the official cash rate by 25 basis points at the start of the month.
A source showed that this month seven institutions cut rates on a range of products by between 0.3 and 0.5 percentage points, suggesting competition to attract funds has eased.
ME Bank cut its online saving product by 0.35 percentage points to 3.15 percent, Bankwest cut its rates on one of its savings accounts 0.5 percentage points to 5 percent and Heritage Bank cut its rates for deposits between A$100,000 and A$250,000 by 0.35 percentage points.
ME Bank chief executive Jamie McPhee told reporters the bank did not have access to the cheaper sources of funding available to major banks but its rates remained higher than those offered by the big four.
'When making interest rate decisions ME Bank always seeks to balance two important objectives: maintaining a fair level of earnings for the not-for-profit industry super funds and their members who own ME Bank, and providing genuinely fairer interest rates to all our customers - both depositors and borrowers,' he said.
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