Banks pass on rate cut to depositors

The Reserve bank of Australia yesterday cut official interest rates by 0.25 per cent to a 49 year low of three per cent. Although banks have announced they will not be passing on the full cut, if any at all, to their mortgage customers, the rate cut has begun to be applied in full to deposit products.

Commonwealth Bank has cut rates on its online saver account and rates on term deposits are expected to fall over the next week.

Financial Advisors are suggesting to depositors who are dependent on their savings for income to consider shifting out of bank deposits to corporate debt, hybrid securities or blue chip shares.

Source: The Australian Financial Review