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 are the two types of NAB locked savings accounts?

With a locked savings account in NAB, you can earn bonus interest and learn financial discipline. NAB offers two types of locked savings accounts, each with their own terms and conditions.

The NAB Reward Saver account pays a variable base interest rate of 0.05 per cent per annum and a bonus interest of 0.55 per cent. You’re eligible for the bonus if you make a minimum of one deposit on or before the second last banking day and have no withdrawals in the month.

Meanwhile, the NAB iSaver account provides 0.05 per cent as the standard base interest rate and a fixed bonus margin of 0.55 per cent during the first four months from the date of opening the account. You can park your cash in the account and enjoy unlimited monthly transfers between linked daily bank accounts without impacting the interest rate.

What is a Westpac locked savings account?

The Westpac locked savings account (also known as "Westpac Life") can help customers reach savings goals faster through bonus interest. Customers receive 0.2 per cent standard base interest with a variable bonus rate of 0.35 per cent when the closing balance at the end of the month is higher than the opening balance.

There are some conditions to earn the bonus interest on Westpac's locked savings account, though. First, you’ll need to increase the balance each month either through a deposit or not making any withdrawals, and then link it to a Westpac Choice account and make at least five eligible payments using your debit card. Please consult your bank as to what an eligible payment is. 

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.

What is an ANZ locked savings account?

An ANZ locked savings account locks your money and prevents you from spending. You may use a standard savings account as the account where your salary is deposited. You can then withdraw funds when needed, but aren’t able to make purchases with it. However, this account may not grow much as the continual withdrawing of funds will limit the interest you can earn.

With a locked savings account in ANZ, you know your savings will grow because you can’t access the money. You can also qualify for a bonus when you deposit at least $10 per month and don’t make any withdrawals. To help you with this further you can set up an automatic transfer from your regular ANZ savings or transaction account so you don’t forget to make a monthly deposit.

Your ANZ locked savings account offers you a base interest rate of 0.1 per cent per annum plus an additional bonus interest of 0.49 per cent per year. The interest is calculated daily and credited to your account on the last working day of the month.

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.

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.

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.

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 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 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.