CBA and Westpac cut savings rates on popular accounts

CBA and Westpac cut savings rates on popular accounts

The Commonwealth Bank and Westpac have today cut rates on some of their most popular savings accounts.

CBA cut its introductory rate on the NetBank Saver and the bonus rate on the GoalSaver for balances over $50,000 – both by 0.05 per cent.

However, the biggest cut of 0.10 per cent was reserved for its Youthsaver account attached to the Dollarmites program.

CBA Youthsaver

  Old rate  Today Difference
Max Rate 0.80% 0.70% -0.10%

CBA NetBank Saver

  Old rate  Today Difference
Intro Rate (5 mths) 0.55% 0.50% -0.05%
Ongoing rate 0.05% 0.05% 0%

CBA GoalSaver

  Old max rate Today - max rate Difference
Under $50K 0.45% 0.45% 0%
Over $50K 0.50% 0.45% -0.05%

Deposit $200+ and make no withdrawals per mth for max rate.

The country’s second largest bank, Westpac, has cut many of its popular savings accounts by 0.15 per cent. However, the 3 per cent rate for savers aged 18-29-years-old remains unchanged.

Westpac subsidiaries St George, Bank of Melbourne and BankSA have also trimmed savings rates today.

Westpac Life

  Old rate Today Difference
Max rate 0.55% 0.40% -0.15%

Balance must be higher at end of mth for max rate.

Westpac eSaver

  Old rate Today Difference
Intro Rate (5 mths) 0.55% 0.40% -0.15%
Ongoing rate 0.05% 0.05% 0%

Westpac Bump

  Old rate Today Difference
Max rate 0.80% 0.65% -0.15%

Balance must be higher at end of mth for max rate.

RateCity.com.au database analysis

Analysis from RateCity.com.au shows since January 1 this year, 19 banks have cut savings rates, with the highest ongoing rate for all Australians now sitting at 1.35 per cent.

However, compared to this time last year, the average big four bank conditional savings rate has plunged by 0.93 per cent, significantly more than the RBA has cut the cash rate.

Savings rates changes in the last year

  Highest ongoing rate Average savings rate Big 4 goal savers RBA Cash rate
Jan 2020 2.25% 0.88% 1.41% 0.75%
Jan 2021 1.35% 0.39% 0.48% 0.10%
Difference 0.90% 0.49% 0.93% 0.65%

Source: RateCity.com.au Rates are from January 22, 2020 and January 22, 2021.

RateCity.com.au research director, Sally Tindall, said: “These cuts are yet another blow for savers with Australia’s two largest banks.

“It’s particularly hard for kids in the Dollarmites program who have little choice than to stick with CBA if they want to keep banking at school.

“Right now, these children are earning just 0.70 per cent. On $500, that’s barely going to get them an ice cream each year,” she said.

“Today the average ongoing savings rate on our database is a measly 0.39 per cent, but if you’re prepared to shop around you could find a rate three times higher.

“The irony is, we’ve never had so much money in the bank. The latest APRA statistics show we’ve got almost $120 billion more in the bank than a year ago, as families move to build up their rainy-day funds.

“Banks are likely to keep chipping away at their rates, even if the cash rate stays the same. If you’ve got money in the bank, give your account a health check once every few months to make sure it’s still competitive.

“Young Australians are the exception – they can still earn rates of up to 3 per cent, if they know where to look,” she said.

Westpac is offering 3 per cent on balances up to $30,000 for anyone aged 18 – 29, while Bank of Queensland is offering 3 per cent for young Aussies aged between 14 and 24 but only on balances up to $10,000.

Highest conditional ongoing savings accounts on RateCity.com.au

(excludes accounts specifically for younger Australians)

Bank Account Max rate
 ING    Savings Maximiser  1.35%
 MyState Bank  Bonus Saver Account  1.20%
 ME Bank  Online Savings Account  1.20%

Source: RateCity.com.au Conditions apply for max interest rate.

Big four banks conditional savings rates

Bank   Account   Max rate

(if conditions met)

 
CBA   GoalSaver   0.45%  
Westpac   Life   0.40%  
NAB   Reward Saver   0.55%  
ANZ   Progress Saver   0.50%  

Source: RateCity.com.au. Note rates are for balances over $50K.

 

Big four bank: standard savings rates

Bank   Account   Intro rate   Ongoing rate  
CBA   NetBank Saver (5 mths)   0.45%   0.05%  
Westpac   eSaver (5 mths)   0.40%   0.05%  
NAB   iSaver (4 mths)   0.60%   0.05%  
ANZ   Online Saver (3 mths)   0.45%   0.05%  

Source: RateCity.com.au

LATEST APRA STATS

  Nov-20 Nov-19 Difference
Deposits by households $1.099 trillion $979.52 billion $119.96 billion

12% increase

Source: Deposit data from APRA monthly banking stats released Jan, 2021.

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Learn more about savings accounts

What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria

What is a good interest rate for a savings account?

A good rule of thumb to keep in mind with savings accounts is to look for a rate that is higher than the CPI inflation rate. This number is constantly changing, so check the Reserve Bank of Australia’s page. If you aren’t earning interest above this then the value of your money will go backwards over time.

How much money should I have in my savings account?

A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

How can I get a $4000 loan approved?

While personal loans and medium amount loans don’t offer guaranteed approval, there are steps you can take to help increase the likelihood of your application being approved, including:

  • Fulfilling the eligibility criteria (providing ID, proof of residency, proof of income etc.)
  • Checking your credit history (you can order one free copy of your credit file per year, and make sure that there aren’t any errors that may be bringing down your credit score)
  • Comparing carefully before applying (making multiple loan applications can mean having your credit checked multiple times, which can look bad to some lenders and reduce your chances of being approved by them)

Do banks run credit checks on savings accounts?

When you apply to open a new savings account, some providers may conduct a credit check, meaning that they will ask a credit bureau for your credit history. This isn’t always the case on savings accounts though and depends on the provider, as you aren’t borrowing money. 

As you are opening a savings account and not borrowing funds, this credit check is considered a soft inquiry and should not affect your credit score. If the bank has run the credit check, you can often still open a savings account even if you have a poor score, provided you meet other requirements. 

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

  • Personal details, including identification (driver’s license, passport etc.)
  • Tax file number
  • Employment details

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

Can you direct deposit to a savings account?

Yes. You can make one off payments or set up regular direct deposits into a savings account. This can be organised easily through online banking or by making deposits in a branch. Talk to your lender to find out the easiest way for you to set up direct deposits.

Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.

What are the requirements of an ING Bank locked savings account?

An ING bank locked savings account - also called a term deposit - offers you interest in exchange for holding your money for a period of time.

The terms offered include as little as 90 days or as long as two years. Generally, the longer you lock your money away, the higher the rate of interest. 

The minimum deposit amount for an ING locked savings account is $10,000. 

To be eligible to apply, you must: 

  • Be an Australian resident for tax purposes
  • Be aged 13 years or older
  • Hold the account for personal use (ING offers business term deposits as a separate product).