Banking with one of the big four gives you access to a large ATM network, but you could be losing out on your savings.
In Australia, ANZ, Westpac, CommBank and NAB are known as the Big Four. These banks hold over 80% of loans in Australia and with such a large share of the market, many borrowers perceive banking with them as safe.
Banking with the big four also gives you access to a large range of everyday bank accounts, savings accounts, term deposits, bonus savers and introductory savings accounts as well as nationwide access to ATMs. All offer online banking to help you manage your finances online. The terms and conditions are quite similar and the common trend is that the interest rates are not that competitive among the big four.
Understanding the details of term deposits is important when comparing accounts to help you reach a specific goal. The minimum deposit amount is typically $5,000, but if you are thinking about investing less, other Australian financial institutions may allow term deposits with a minimum of $1,000.
The big four banks market share
Commonwealth Bank currently has the largest market share out of the big four while ANZ currently has the smallest market share out of the big four.
Banks are required to pay the regular 30% tax rate. A Tax Justice Network report released in September 2014 revealed that in the 10 years from 2004 -13, the big four banks had an average effective tax rate of 27%.
Since the big four hold such a large market share, borrowers tend to think it's safer to apply for a home loan with one of the big four. If a bank defaults on it's obligations, you could potentially lose your home if you still have a mortgage.
If you feel more comfortable with keeping your savings secured with one of the big four, keep in mind that most most banks in Australia are covered by the Government Guarantee, insuring your savings of up to $250,000 per person, per institution should there be a financial crisis.
|Bank||Gross loans and acceptances 2015-2016 $AUD*|
|Westpac (including St George)||1,878,662|
Who owns the big four banks in Australia?
HSBC, JP Morgan, National Nominees Ltd and Citicorp collectively own a minority share in each of the big four banks.
|Bank||Share in big four banks|
|HSBC||6.91% of Westpac; 16.83% of NAB; 18.48% of ANZ; 14.80% of CommBank|
|JP Morgan||12.75% of Westpac; 12.03% of NAB; 14.40% of ANZ; 11.57% of CommBank|
|National Nominees Limited||9.93% of Westpac, 10.14% of NAB; 11.76% of ANZ; 8.5% of CommBank|
|Citicorp||4.94% of Westpac; 4% of NAB; 4.15% of ANZ; 4.47% of CommBank|
*Source: Credit Card Compare
Which big four bank best suits me?
Availability of customer service
|Big Four Bank||Phone||Live Chat|
|NAB||Mon-Fri 8am - 7pm (AEST/AEDT)Sat-Sun 9am - 6pm (AEST/AEDT)||Yes|
|Westpac||8am - 8pm, 7 days a week from anywhere in Australia||Yes|
|ANZ||7am - 10pm your local time in Australia||Yes|
Choosing the right bank for you depends on your personal financial needs. Along with NAB and ANZ, Westpac and Commonwealth Bank make up Australia’s so-called ‘big four’ banks. As such, they all offer a similar range of products and services. To find the better bank for you, consider the accounts and services you wish to use, for example a no annual fee credit card and a low-fee everyday transaction account, and then compare what each bank has to offer.
What are the features I should look for when comparing savings accounts from the big four?
There is a lot to think about when you are making a choice between different savings accounts. When you are looking at those offered by the big four, make sure that you are noting the following features of each.
You're getting a competitive interest rate
Interest rates will help determine how quickly your savings can grow. Look at the base variable rate of the account to help determine which ones have the best value. With the big four, you are going to find that each one offers a savings account that pays bonus interest for meeting specific terms. Check this rate as well, and add it to the base to see how much interest you will really be earning.
You can meet the bonus rate conditions (if they are any)
The terms for earning the bonus rate should play a big role in the account you choose, because if you don’t meet them, you will only earn the base rate for that month. For example, with Westpac you need to make at least a $50 deposit and no withdrawals to get the bonus rate, while CommBank requires that you grow your savings by at least $200 but with one withdrawal allowed. Since the base rates are typically very low, you will want to ensure that you are able to meet those terms before investing your savings.
You can bank 24/7 Online
The big four banks all have internet and mobile access. So it comes down to who offers the best online or mobile banking experience. CommBank's NetBank has arguably been voted the best. Look into the apps as well to ensure that it is compatible with your mobile device if you like banking on the go.
What are the benefits of banking with the big four?
- More access to your money. By choosing one of the big four, you will have easy access to your savings through their large number of branches, ATM networks and online banking. Our research shows that the big four currently hold the biggest ATM networks in Australia.
- 24/7 customer service. Depending on the big four bank you choose, you're likely to have access to a 24/7 customer service centre if you have a financial emergency. See the table below for our analysis.
- Easily link your big four bank account. If you are already banking with one of the big four with your everyday account, you'll find it easy to link to other savings accounts (assuming you can link to any Australian financial institution).
What are the risks of banking with one of the big four?
While your money may be secure with a savings account with the big four, you are not necessarily getting the most value. Avoid the following when choosing the right bank for your savings.
- Choosing a brand. The big four are all well known brands in Australia, but you should still look at other banks when making your comparisons. This helps to ensure that your savings are working as hard as possible towards your financial future.
- You are probably receiving lower interest rates. The big four have a reputation for having the lowest interest rates in the market.
- Competitiveness. Due to their popularity, the big four banks are not always as competitive with their rates as smaller banks are.
Which banks still issue deposit books?
Many banks, including Westpac and Bendigo Bank, still issue deposit books. However, they have largely been phased out in the age of internet banking, so you may need to contact your bank directly to request a deposit book.
How do I stop unsolicited phone calls from the banks?
The easiest way to stop receiving telemarketing phone calls from banks or any other company is by joining the Do Not Call Register. This service, run by the government, adds your home and/or mobile phone number to a blacklist that prohibits companies from calling them unsolicited.
But wait, I have some more questions!
Where can I find consolidated information on the savings accounts the big four offer to compare?
finder.com.au provides up to date reviews of these accounts, highlighting the features and benefits to help make your comparisons easier.
If I have a transaction account with one bank, will I be able to link my savings account from another?
That depends on the institutions and their policies.
How do you know the difference between a base rate and a bonus rate?
You have to look closely at the fine print. Some banks will lump the two together when advertising, but the standard will usually be listed as a low variable rate, with the bonus rate significantly higher.