The Rate Cut Reluctance of Banks
Posted April 8th, 2009
In light of the RBA’s most recent April interest rate cut of 0.25%, Commonwealth Bank, ANZ, Suncorp, St George and Westpac have all cut their rates by 0.10%. This is not even a product wide cut – Suncorp and St George’s cuts only apply to their variable rates for instance.
It’s interesting to note that while banks will make excuses like ‘We can’t currently afford to cut our rates‘ or ‘We will review the decision‘ (and never return a result), they never seem to hesitate on cutting their rates on savings accounts.
In the past, Australian banks have gladly taken up to a month to reduce their rates only by a fraction on consumer finance, but will reduce the interest rate on their high interest savings accounts by the full rate cut or more the next day.
Credit card rates will be updated as soon as they are officially adjusted by Australian financial providers. Keep a close eye on the low interest credit cards to see how long it takes our banks to update credit card interest rates.
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Comparison of our Top Credit Card Offers
| Interest Rate (p.a.) | Balance Transfer Rate (p.a.) | Annual Fee | Cash Advance Rate (p.a.) | |||
|---|---|---|---|---|---|---|
Bankwest Breeze MasterCard | A low interest rate on everyday purchases with a low balance transfer offer | 0% for 6 months (reverts to 10.99% ) | 4.99% for 9 months | $49 | 21.99% |   |
Citibank Clear Platinum Card | A low interest rate offer on balance transfers and purchases | 11.99% | 0% for 12 months with 3% handling fee | $99 | 21.74% | |
St.George Vertigo | An introductory offer on balance transfer and a low annual fee | 13.24% | 0.99% for 6 months | $55 | 21.49% | |
Virgin Flyer Credit Card | Earn 1 velocity point per $1 spent, plus an introductory offer on balance transfers | 20.99% | 1.9% for 12 months | $50 (for first year thereafter $99) | 20.99% | |
Westpac 55 Day Credit Card | No annul fee for the first year with a low rate on balance transfers and purchases | 0% for 5 months (reverts to 19.59% ) | 3.99% for 6 months | $0 annual fee for the first year ($30 thereafter) | 21.49% | |
The banks claim that they are not in a position to pass on rate cuts even though they have been making billion dollar profits year after year. Cutting savings interest rates should be in line with the mortgage rate reductions in my opinion! Recently with the introduction of the Government Guarantee of bank deposits, a huge number of the population took their money out of shares and bonds etc and deposited to the banks. The banks then use this money to lend to consumers and business – but the banks only pay the official RBA interest rate!! Banks have a lot to answer for in respect of rates!