Westpac cuts savings rates

Westpac cuts savings rates

Australia’s second largest bank, Westpac, has today cut its savings account rates by 0.05 per cent.

Westpac savings account rate changes

  • Westpac’s eSaver introductory rate has been cut by 0.05% taking it to 1.00%.
  • Westpac’s Life bonus rate has been cut by 0.05%. The maximum ongoing rate is now 1.00%.
  • No cuts to ongoing and base savings rates.
Westpac eSaver Old rate New rate Difference
Intro rate (5 months)

1.05%

1.00%

-0.05%

Ongoing rate

0.05%

0.05%

No change

 

Westpac Life Old rate New rate Difference
Max rate (if conditions met)

1.05%

1.00%

-0.05%

Base rate

0.40%

0.40%

No change

Conditions for max ongoing rate: Balance needs to be higher every mth.

Analysis from RateCity shows almost 30 banks have cut at least one savings account rate this month, despite no move to the cash rate since March.

Seventy-seven (77) per cent of all savings accounts on the RateCity.com.au database have maximum rates under 1 per cent.

RateCity research director, Sally Tindall, said today’s changes from Westpac served as a good reminder for savers check their rate.

“Banks have been chipping away at savings rates since the emergency cash rate cut in March, on the back of sharper home loan rates and a drop in demand for deposits,” she said.

“While the ultra-low savings environment is likely to remain for the foreseeable future, savers shouldn’t just accept a rate below 1 per cent.

“There is competition in the savings market if you know where to look, with a handful of banks still offering ongoing rates of up to 1.85 per cent,” she said.

CONDITIONAL SAVINGS ACCOUNTS

Big four banks:

Bank Product Base rate Max rate Conditions
CBA Goal Saver

0.10%

0.50%

Deposit $200+/mth, no withdrawals
Westpac Life

0.40%

1.00%

Balance needs to be higher every mth
NAB Reward Saver

0.05%

1.00%

1+ deposit and no withdrawals per mth
ANZ Progress Saver

0.01%

0.85%

Deposit $10+/mth, no withdrawals

Note: based on a balance of less than $50K. CBA has higher rates for higher balances.

Market leaders:

Bank Max rate Base rate Conditions for max rate
Bank of Queensland

1.85%

0.20%

Deposit $1k+ and 5+ purchases / mth on linked account
Up

1.85%

0.10%

Make 5+ purchases /mth via linked account
86 400

1.85%

0.25%

Deposit $1k+ per month

Note: the savings accounts with the highest ongoing rates on RateCity.com.au

STANDARD SAVINGS ACCOUNTS

Big four banks:

Bank Product Intro rate Ongoing rate Intro term
CBA NetBank Saver

1.05%

0.05%

5 mths
Westpac eSaver

1.00%

0.05%

5 mths
NAB iSaver

1.05%

0.05%

4 mths
ANZ Online Saver

0.80%

0.05%

3 mths

Market leaders:

Bank Account Intro rate Intro term Ongoing Rate
Macquarie Bank Savings Account 2.26% 4 months 1.35%
Rabobank High Interest Savings 2.25% 4 months 0.80%
AMP Bank Saver Account 2.20% 6 months 1.05%

Note: the highest introductory rate savings accounts on RateCity.com.au.

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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.

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 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.

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)

Can you set up direct debits from a savings account?

It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

Some transaction accounts allow you to set up direct debits and also earn interest, though you may not enjoy as much flexibility as a dedicated transaction account, or get as high an interest rate as a dedicated savings account.

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

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.

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.

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.

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.

Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

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. 

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.