Retirees, savers dealt another blow as NAB slashes interest rates

Source: Wikimedia Commons

National Australia Bank cut its 'Reward Saver' and Retirement Account interest rates by 25 basis points on Tuesday.

This comes after the bank made a 25 basis point cut to its 'iSaver' account last week.

Through the 'Reward Saver', the base interest rate is just 0.05% p.a, while the bonus interest rate is now 0.95% p.a.

The bonus applies to account balances up to $50,000.

To get the bonus, customers must make at least one deposit and no withdrawals each month.

For the bank with the slogan 'more than money', NAB's Retirement Account has also seen a 25 basis point cut to its interest rate that applies to balances above $50,000.

That interest rate is just 0.36% p.a for balances between $50,000 and $249,999. 

Interest is calculated daily and paid quarterly on this account, as opposed to the more common monthly interest payment.

Market-wide, the cuts bring NAB in-line with other big four savings accounts:

• ANZ Progress Saver: 1.00% p.a (0.99% p.a bonus, 0.01% p.a base rate)
• CommBank Goal Saver: 0.50% p.a (0.40% p.a bonus, 0.10% p.a base rate)
• Westpac Life: 1.30% p.a (0.90% p.a bonus and 0.40% p.a base)

Interestingly, with headline inflation at 1.80%, savers are effectively losing money over the course of a year if they receive a 1.00% interest rate.

Comparing the big four banks' interest rates on their savings accounts, they lag behind other market-leading competitors in the space, as seen in the table below.

There are also a bevy of introductory rate savings accounts out there, with higher interest rates for four to six months, however the rates after that period usually revert to something much lower.

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