Bank slashes interest rate on savings accounts

Just when many Australians were struggling to save money during the cost of living crisis, one of the country’s biggest banks has slashed the interest rate on customers’ savings accounts unless they meet new conditions.

ANZ has dropped its ongoing rate on Plus Save accounts from 4.9 per cent to 0.5 per cent unless customers grow their balance by at least a $100 each month.

Customers who meet the new terms will receive a bonus 4.5 per cent, taking the maximum ongoing rate to 5 per cent.

The announcement follows a similar move by Westpac last month, which cut its base rate by 0.15 per cent and increased its bonus rate by the same amount.

It meant Westpac Life customers could still earn a maximum rate of 5 per cent, but only if they increased their balance each month.

The Australian Competition and Consumer Commission found about 71 per cent of bonus interest accounts missed out on bonus interest in any given month.

RateCity.com.au money editor Laine Gordon said the move from ANZ was a double-edged sword for savers.

“People who can squirrel away an extra $100 or more each month into their ANZ Plus Save account will be rewarded with a rate hike,” she said.

“Others who can’t squeeze any extra savings from their budget, however, will see their savings goals take a major hit.

“Keen savers can now get ongoing rates of 5 per cent or even higher, however, customers would do well to read the fine print.

“The majority of these high interest accounts are riddled with specific conditions that can send your monthly interest into a black hole the moment you miss a step.”

Ms Gordon said people should look for a savings account that aligned with their finances.

“If the monthly terms and conditions are hurdles you can’t jump easily, then look for something that better suits your lifestyle,” she said.

Canstar.com.au found in the last three months there had been 12 changes to savings rate structures on existing accounts that decreased, while only 3 had increased.

Canstar data insights director Sally Tindall said the change to ANZ Plus Save accounts would see some customers earn more interest on an ongoing basis, but anyone who did not meet the new terms would see their interest rate plummet.

“ANZ Plus launched this ‘no strings attached’ account back in early 2022, attracting savers who were tired of jumping through hoops to qualify for the maximum rate,” she said.

“This change today would have ruffled a few feathers among its current customer base.”

Ms Tindall said most high-interest savings accounts came with a few strings attached to qualify for that maximum rate, however, there was still one bank offering an ongoing rate above 5 per cent with no monthly conditions and three others offering rates of 4.75 per cent or higher.

“Bonus saving rate schemes are a game you need to play with a close eye on the rules,” she said.

“For keen savers who can meet any regular conditions with their eyes shut, this type of account might be up their alley.

“However, if you’re a haphazard saver or someone who hates staying on top of the rules, it could well be worth putting your savings into a different field altogether.

“What’s important is to work out which type of account will fit with your savings habits, then spend time looking for one offering a competitive rate.”

ANZ have been contacted for comment.