Australia's big four banks not making it easy for customers to get bonus interest despite watchdog's calls
Two in three customers of bonus accounts miss out on the headline interest rate and instead receive a far smaller base rate, an Australian Competition and Consumer Commission inquiry found in late 2023.
Savers can be disqualified from earning the advertised rates when they do not make a deposit into their account each month or grow the balance. Some savings products also require customers to make no withdrawals.
The consumer watchdog advised banks in 2023 to report the share of customers achieving their full rate; make clear whether alternative products offered better rates for those not meeting conditions; and alert customers to consider whether alternative products suit them better.
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No major bank has adopted those recommendations in full, according to Guardian Australia analysis.
The regulator also recommended banks notify customers at risk of breaching requirements, which is a measure all of the major banks say they have implemented.
Spokespeople for NAB, CommBank, Westpac and ANZ said they offered in-app alerts and email reminders to help savers get their full interest rate.
Kristle Cortés, associate professor and co-founder of the University of New South Wales' RISE Finance Lab, said regulation may be required to ensure banks improve their practices.
'The recommendations really go to the heart of transparency and fairness in retail banking,' Cortés said.
'It's hard to save … so without clear or better feedback, most customers don't actually realise what rate they get, and they could potentially miss out.'
The ACCC found in 2023 that those with smaller bank balances were more likely to miss out on bonus rates.
Guardian Australia has previously detailed the experiences of an ING customer who missed out on their bonus rate.
One couple with a NAB account said they felt 'sickened' after missing out on thousands of dollars of interest and claimed they did not receive an alert.
The couple, who asked to remain anonymous, sold their home on the mid-north coast of New South Wales in April 2024 and deposited $350,000 of the proceeds in a new NAB Reward Saver account.
Six months later, they realised they had unwittingly disqualified themselves from the full interest rate of 5% p.a. by withdrawing from the account each month.
Had the couple made no withdrawals, the full rate would have handed them more than $8,000 over that period. Instead they received the base rate of 0.35% p.a., equating to less than $600.
'[NAB] never emailed me since to say that 'you're losing money, you're losing interest, you're not meeting the conditions,'' the husband said.
'Obviously it's to their benefit – it saved them thousands.'
Kylie Young, a NAB executive, said the bank did email customers to remind them if they missed the criteria and informed them on how to qualify for bonus rates when they opened the account. NAB was unable to comment on individual cases.
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'While bonus interest is really important, it's also crucial the customer gets the right savings account that matches their financial needs and goals,' Young said.
Banks have increasingly enticed savers towards bonus interest products by making rates offered on regular savings alternatives, with no conditions, less attractive.
When savers fail to qualify for their bonus rate, the bank gets access to their customers' money by paying a very small base rate. The cheap money can then be used to finance other parts of their bank operations, including profitable mortgage books.
Nearly 90% of Westpac's household deposits now sit in conditional accounts with high advertised rates, its half-yearly report showed. Up to 15% of balances in Westpac's Life Saver account receive only the base 0.4% interest rate.
The major banks have slashed the base rates paid on conditional accounts in the last year. Westpac Life savers endured the biggest cuts, now entitled to just 0.4% p.a. interest when they had received 2% in early 2024.
The other big banks offer even lower base interest rates, with NAB's base rate at just 0.1%.
Representatives of Commonwealth Bank, Westpac, NAB and ANZ declined to detail what proportion of customers achieved bonus interest in response to questions.
ANZ declined to share what proportion of account balances had bonus conditions.
NAB said less than 20% of its conditional account balances missed out on their bonus interest while Westpac said less than 15% of bonus account balances missed out.
Guardian Australian understands 14% of balances in CommBank's conditional account do not receive bonus interest.
Spokespeople from the major banks said they aimed to inform customers and help them choose products that suited their individual circumstances.
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