If savers thought they had seen the last of the bad news, they had better get used to lower interest rates from the big four banks.

According to The Australian, three of the big four of Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) have sliced 25 basis points, or 0.25% off their online saver interest rates.

While the banks increased the interest rates on their longer term (one and three-year) term deposits last month, the majority of term deposits and online savings accounts have seen cuts – after the RBA cut the official cash rate to 1.5%.

The Australian reports that ANZ, CBA and Westpac have cut their online saver account interest rates by 25 basis points to 2.01%, 1.95% and 1.85% respectively. NAB has held its Reward Saver interest rate steady at 2.95%.

Deposits are a major source of bank funding, particularly for the big four banks, and there was $538 billion sitting in term deposits with the banks at the end of July 2016 according to the RBA’s most recent report.

But cutting interest rates could see customers take their cash out and go elsewhere – particularly when the banks’ shares are offering fully franked dividend yields of more than 5% – or over 7% grossed up.

The banks also faced higher wholesale funding costs and potentially higher capital requirements – which means they need to claw back some of the money they are paying out.

Foolish takeaway

If you have significant amounts of cash in your bank account or short term deposits, now might be the perfect time to look elsewhere for a better-returning asset.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.