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Big four bank reduces rates
As financial markets prepare for a likely rate reduction in February, banks are beginning to reduce their rates, with savers ultimately losing, new research has revealed.
Big four bank reduces rates
As financial markets prepare for a likely rate reduction in February, banks are beginning to reduce their rates, with savers ultimately losing, new research has revealed.
Analysis from comparison site Canstar has revealed the big four banks are looking to reduce saving rates out of cycle.
NAB has reduced the introductory rate on its iSaver by 0.15 per cent to a new rate of 1.44 per cent as well as a reduced bonus rate on its Reward Savers account by 0.11 per cent to 1.39 per cent.
Steve Mickenbecker, Canstar’s finance expert, believes this is another blow to long-term savers, as savings rates fall well below inflation.
“This out-of-cycle rate cut was unexpected and positions the overall rate on NAB’s iSaver account between 0.05 per cent and 0.11 per cent below the other major banks. The season of good cheer will be well behind us if the other majors follow suit.”
Rod North, founder and managing director of Bourse Communications, believes these reductions in rates are ultimately forcing consumers into the market.
However, he cautioned investors might not be aware of the additional risk they are taking on.
“A lot of investors do not understand their capital is at risk when they invest in shares even though the return from an income point of view is better.”
“When you move from cash, which is 100 per cent secure, into a sharemarket, nothing is secure,” Mr North explained.
“Before rushing into the market, savers can get a maximum rate available for accounts with an introductory period at 2.65 per cent, with the top bonus savings account earning 2.25 per cent. Savers must start looking at options beyond the obvious,” Mr Mickenbecker suggested.
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