AMP cuts introductory interest rate barely a week after raising it

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on April 08, 2020
AMP cuts introductory interest rate barely a week after raising it

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AMP has rolled back the interest rate on its once market-leading introductory savings account, barely a week after increasing it by more than 50 basis points.

On 27 March AMP announced a new interest rate on its AMP Saver Account, increasing the rate by 54 basis points from 2.11% p.a. to 2.65% p.a. 

This interest rate was comprised of: 

  • An introductory interest rate of 1.60% p.a.
  • A base interest rate of 1.05% p.a. 
  • An introductory term of six months

The maximum interest rate of 2.65% p.a. was one of the highest savings account interest rates available - only Macquarie Bank held a similar interest rate with its 4-month introductory rate of 2.65% p.a. 

However, less than two weeks later, AMP reversed most of this interest rate increase, cutting the new interest rate by 39 basis points to a maximum rate of 2.26% p.a. 

Key info

  • The base rate is 1.05% p.a. 
  • The introductory rate is 1.21% p.a. 
  • These rates apply for deposits between $5,000 to $500,000
  • The introductory term is still six months 

UPDATE: An AMP spokesperson told that "clients who signed up during the bonus period will continue to receive the bonus 1.60% above the standard variable rate (currently 1.05%) for six months", meaning their interest rate will remain at 2.65% p.a.

All new customers however will get 2.26% p.a.

The table displays how this account now compares to other introductory savings accounts on the market with high interest rates. 

The 2.26% p.a. interest rate is still higher than nearly every other non-introductory savings account on the market - only Xinja, which recently stopped taking new customers in order to preserve its interest rate - comes close at a 2.25% p.a maximum rate at the time of writing. 

But the caveat with products like the AMP Saver is that the rates are introductory - such accounts only have a temporarily-high interest rate, which reverts to the base rate specified once the introductory term is over. 

In this case, the rate on AMP's account would revert to just 1.05% p.a. after 6 months, well below the annual rate of inflation (1.80%) and the rates of other savings account products. 

The table below features savings accounts with some of the highest non-introductory interest rates on the market.

Non-introductory savings accounts tend to have lower total interest rates than introductory ones, but could allow you to earn more interest long-term.

Read: The different types of savings accounts explained 

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William Jolly joined as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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