Sign up: AU Breaking News email<\/sub><\/a><\/p>\nIn recent years, banks have heavily promoted bonus-interest products, which have much higher headline rates than regular savings accounts.<\/p>\n
However, there are a range of conditions that can also trip up customers, leaving many earning almost no interest. Savers can easily be disqualified from earning the advertised headline rates when they do not make a deposit into their account each month or grow the balance. Some products also require customers to make no withdrawals.<\/p>\n
The consumer regulator has found that about two-in-three customers with bonus accounts miss out on the headline interest rate.<\/p>\n
When savers fail to qualify for their bonus rate, the bank gets access to their money for virtually nothing.<\/p>\n
If it feels like the big retail banks \u2013 Commonwealth Bank, Westpac, National Australia Bank and ANZ \u2013 are being very strategic about their savings rate decisions, it\u2019s because they are.<\/p>\n
Two days after the rate announcement, Westpac announced that savings rates would rise \u2013 but customers should read the fine print.<\/p>\n
For example, the interest rate on one of its savings products for people aged 18 to 34 will be bumped up by 25 basis points to an attention grabbing 5.25%, although there are limits on account sizes and multiple conditions.<\/p>\n
Banks want to entice young adults into their savings products because that might translate into a mortgage down the track.<\/p>\n
If conditions on the young adult-focused product are breached, the rate drops to just 0.1%. It\u2019s notable the rate increase has not been applied to the base rate.<\/p>\n
At the time of writing, the three other majors still have their savings rates under review, three days after the rate announcement.<\/p>\n
The major banks were contacted for comment. NAB says savings rate changes may roll out at different times across products \u201creflecting differences in funding costs, market conditions, and product features\u201d.<\/p>\n
Given households are holding record levels of cash, competition for deposits is muted. This opens the way for Australia\u2019s biggest financial institutions to play this strategic game, as opposed to having them fight ferociously for your savings.<\/p>\n
Tindall says customers should consider \u201ctaking your nest egg shopping\u201d to find a better deal.<\/p>\n
\u201cIf more customers moved and chopped around more regularly, we would see a boost in that competition because banks need deposits from households to help fund their home loans,\u201d Tindall says.<\/p>\n
\u201cIt is an important source of their funding, and if they\u2019re not getting enough of that in the door, then they\u2019re going to have to post more competitive rates.\u201d<\/p>\n
Outside the big four banks, Canstar notes that ING\u2019s rate on its savings maximiser has been lifted to 5%, although there are conditions and the base rate for those who fall foul of its terms is almost zero.<\/p>\nMacquarie\u2019s offer of 4.5% is on track to be the highest \u201cno-strings attached\u201d ongoing savings rate in the market, according to the comparison site.<\/p>\n
If the response of lenders to Tuesday\u2019s rate increase has you seeing red, spare a thought for mortgage customers of the Bank of Queensland-owned ME Bank.<\/p>\n
They received an email this week that said the bank was \u201cpleased\u201d to be passing on the rate increase in full to their variable rate home loans.<\/p>\n
ME Bank followed up with an apology, acknowledging that \u201crate increases can be challenging, and we\u2019re here to support you\u201d.<\/p>\n