Good news for term deposits was short-lived

Peter Terlato 6 September 2016

No savings piggybank money

Banks cut savings rates ahead of RBA decision.

ANZ and several other banks have reduced rates on term deposits and some savings accounts ahead of the Reserve Bank's (RBA) cash rate decision later today.

Always reviewing rates, ANZ trimmed 25 basis points off most of its term deposit accounts after the official cash rate was reduced to a record low 1.5% in August.

Deutsche Bank analysts told The Australian that ANZ wasn't the only financial institution to slash deposit rates. The financial services provider said all the major banks, aside from Westpac, had cut rates by 12-25 basis points.

Adelaide Bank, Bankwest, Bendigo Bank and the Bank of Queensland scaled down both short and medium-term deposits.

There were some banks that boosted rates on savings accounts early last month following the RBA's decision, including NAB, Commbank, St. George and BankSA.

ANZ bolstered its longer term accounts, raising interest rates on one-year deposits to 3% (+60 basis points) and two-year deposits to 3.2% (+75 basis points).

Since then all the big banks have reduced rates for online "at call" savings accounts. For example, ANZ's Progress Saver rates fell to 2.01%, while Westpac dropped the interest on its Reward Saver account to 1.85%.

The decision to cut rates ahead of the RBA announcement isn't anything new. Most banks did the same thing ahead of 2016's first rate cut in May.

If you're curious as to how changes in the cash rate affect you, check out our in-depth explanation.

Visit our RBA cash rate page for the latest news, updates, tips and forecasts on the upcoming announcement.

Picture: Shutterstock

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