Australia: Two of Australia’s biggest banks quietly cut savings rates

Within the past fortnight, two of Australia’s biggest banks, Westpac and Commonwealth Bank have slashed 0.3% points off base rates for online saver accounts to a base of 0.5%.

Similar cuts have been passed at rival big four banks within the past year, even though official interest rates have not budged. However, while Westpac and CBA have cut their base rates by 0.3%, they have simultaneously increased their introductory rates.

While these higher introductory rates allow the major banks to advertise rates of around 2.5%, after the introductory period ends, the big 4’s base rates vary between 0.5% and 0.8%.

According to RFi Group data, of those likely to switch financial institutions in the next 12 months, 1 in 7 savings account holders are likely to switch for introductory offers, compared to almost 1 in 3 savings account holders likely to switch institutions for better interest rates overall.

This suggests that although introductory offers may influence savings account holders to switch, the likelihood of influencing savings account holders to switch financial institutions may be higher based on rates overall and not just introductory offers on their own.

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