Australian banks slow to pay interest but quick to hike rates
Australian Banks are always keen to put the interest rate up on home loans, sometimes, like the last interest rate rise for example, before any official interest rate rise by the Reserve Bank of Australia.
It seems that the banks aren't so keen to increase the interest rates on savings accounts with the same speed and efficiency.
For those who don't know how the interest rates work.
The Reserve Bank rate is not law. It's just a guide as to what the banking sector should be charging or paying their customers. So in that regard, the banks are not breaking the law by putting interest rates up or down as they see fit.
The only problem with privatisation is that we now have interest rate rises because the banks try to maintain their profit margin. They say it's because they are losing money because of the increase in costs after the home loan credit crisis in America.
Many of the regular savings accounts that have under $5000 should be earning interest at around 6.75% today, but the banks have long ago stopped paying interest on accounts with small balances, again, I and many others would suggest it is to boost profits.
The Reserve Bank released figures yesterday showing the banks were very slow in passing on any interest rate rise on deposits including accounts such as term deposits.
What these figures do highlight is that business is business. If you can get a better deal on your savings or loans at another bank then don't hesitate to do so. Just make sure that you know what fees and other charges could be involved when transferring accounts, especially a home loan.
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