In short:
The big four banks' annual reports show they are sitting on billions in customers' money that is not earning interest.
asserted
that → show → interest
Consumer advocates fear stringent conditions attached to high-interest savings accounts contribute to a broader issue.
What's next?
asserted
What → fear → issue
Savers are being urged to be aware of the terms and conditions and shop around.
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Savers → urge → terms
Savers with billions of dollars in Australian banks could be missing out on the benefit of rising cash interest rates as a result of onerous account conditions or because they have not opted for the right type of savings product.
uncertain
they → miss → product
Data compiled for the ABC by comparison site Canstar shows following the last RBA interest hike announcement the Commonwealth Bank, NAB, ANZ and Westpac each increased their maximum saving rates by 0.20 or 0.25 per cent.
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Bank → compile → 0.20
Consumer advocates fear some of that money is sitting in high-interest savings accounts that come with strict conditions, including regular contribution amounts, and customers are falling just shy.
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customers → fear → amounts
The competition regulator found in a 2023 retail deposits inquiry more than 70 per cent of customers never met the monthly conditions.
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cent → find → conditions
While each of the major banks were quick to increase the interest paid on mortgages after the September rate hike, customers with high interest savings accounts have not been finding the corresponding interest rate increases as lucrative.
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customers → increase → increases
Canstar said it found the rate increases were applied only to a select few of the banks' savings account products, and with strict conditions attached.
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conditions → say → products
Unless savers meet those requirements they reverted to a base rate for interest that the banks have kept flat at 0.10 per cent.
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banks → meet → cent
That means one slip-up, for example, missing the target for the minimum monthly deposit, or forgetting about the minimum withdrawal requirements, and savers receive virtually zero in interest.
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savers → mean → interest
Then there are customers who do not make the most of rate hikes at all, with the big four banks sitting on hundreds of billions of dollars of customers' money in accounts that are earning no interest.
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that → be → interest
As of June, the Commonwealth Bank held nearly $122 billion of its customers money in accounts earning no interest, according to its annual report.
uncertain
Bank → hold → report
Westpac held nearly $82 billion as of March, while NAB held about $67 billion, and ANZ held about $61 billion in the same period.
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ANZ → hold → period
Banks need to be more proactive
Canstar's Sally Tindall said when banks announced they were passing rate rises it was not as clear-cut as it appeared.
"Many customers will miss out, at least from time to time, because they don't meet those terms and conditions," she said.
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she → need → terms
She argued banks could be doing more to ensure their customers did not miss out.
uncertain
customers → argue → more
"Alerting people with a proactive email or text message … close to the end of the month that tells you if you're not going to meet those terms and conditions,"she said.
asserted
you → alert → terms
Melbourne saver Corey Washbourne said he did not find the conditions on his account too onerous.
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conditions → say → account
He adds about $50 a month to get the bonus rate.
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He → add → rate
He is thankful for the higher interest rates on his savings accounts, because it is protecting the value of his savings against inflation and gives him breathing room.
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it → protect → room
"It's just reassuring to know that you've got that interest coming into your savings account to top it up and act as that buffer, and you're not going backwards as much.
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you → know → buffer
In a statement to the ABC, the Australian Banking Assocation's chief executive Simon Birmingham said banks supported customers to get the most out of their savings, including through app alerts and messages.
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banks → say → alerts
"Australia's savings market is highly competitive, with hundreds of term deposit and savings account options available to customers," he said.
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he → say → customers
Across the last financial year, Mr Birmingham said banks paid out more than $120 billion in interest to depositors.
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banks → say → depositors
"Product offerings from banks do vary and this choice gives customers the flexibility to choose products that best suit their personal circumstances," he said.
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he → vary → circumstances
Billions of dollars not earning interest
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Billions → earn → interest
On top of marginal interest repayments, many Australians are missing out on the opportunity to make a bit of extra cash each month from choosing a bank account that pays no interest.
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that → miss → interest
The ACCC inquiry found only 16 per cent of consumers switched their savings account in the past three years, and only 11 per cent have switched their transaction account.
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cent → find → account
Western Sydney University associate professor of accounting and financial planning Michelle Cull said consumers should be conducting "regular checks" of their banking to ensure they were getting the best deal.
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they → say → deal
Dr Cull said, for example, by exploring the option of an offset account.
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Cull → say → account
"Because you are actually going to be saving the interest rate that has just gone up for paying the mortgage,"she said.
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that → go → mortgage,"she
"Plus you're not paying tax on it [compared to interest on savings], so there's an extra saving there."
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you → pay → savings
But she emphasised every situation was unique, and it was important for consumers to read the fine print.
"
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consumers → emphasise → print
You really need to look carefully at your own circumstances."
Behind those shiny numbers that the banks promote on their savings products, Dr Cull said there could be several caveats.
uncertain
Cull → need → products
"Remembering an introductory rate is only for a limited time," she said.
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she → remember → time
RBA meets again to discuss interest rates
The Reserve Bank will meet again next week, to decide whether interest rates will hike again, for a fifth time this year, with the goal of curbing inflation.
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rates → meet → inflation
Earlier this month, Reserve Bank deputy governor Andrew Hauser said the inflation outlook was "materially worse" than the RBA had forecast, lifting the odds of a hike in November.
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RBA → say → November
Markets are putting the chances of a rate rise at 98 per cent.
asserted
Markets → put → cent
Ms Tindall said if customers were not happy with their savings account, they could "take your nest egg shopping".
uncertain
they → say → shopping
The Aporia