Westpac cuts savings rates as CBA continues to hold out (for now)

Westpac cuts savings rates as CBA continues to hold out (for now)

Australia’s second largest bank, Westpac, has today reduced their savings rates by up to 0.20 per cent.

This comes on the back of savings rate cuts from NAB and ANZ last Friday. CBA is the only big bank that hasn’t cut savings rates following the July RBA cash rate cut. 

Westpac eSaver 

Effective today, Westpac has cut the ongoing rate on its eSaver account by 0.15 per cent. The eSaver account now gives you 2.16 per cent interest for the first 5 months, then an ongoing rate of just 0.15 per cent. 

 

Intro rate

Ongoing rate

Old rate (pre 2 July)

2.31%

0.30%

New rate (today)

2.16%

0.15%

Change

-0.15%

-0.15%

Westpac Life 

Also, effective today, Westpac has cut the base rate on its Life account. However, it has taken the unusual step of increasing the bonus rate by the same amount. As a result, customers who make one deposit a month, and end the month with a higher balance than they started with, will still continue to receive the same maximum rate. 

 

Base rate

Bonus rate

Max rate

Old rate (Pre 2 July)

0.80%

1.30%

2.10%

New rate (today)

0.60%

1.50%

2.10%

Change

-0.20%

+ 0.20%

No change

RateCity.com.au research director Sally Tindall said today’s changes from Westpac were a mixed bag.

“This is a surprising move from Westpac today. Customers with an eSaver will be bitterly disappointed to find out they’ll be earning just 0.15 per cent interest on their savings on an ongoing basis.

“Westpac customers who are regular savers have been rewarded. Customers who can make one deposit a month and keep building up their savings balance will get the same maximum rate. This is a pretty big olive branch in what is an otherwise hostile environment for savers.

“Westpac has bucked the trend today, passing on smaller rate cuts to savers on their main two savings accounts than to their home loan customers.

“All eyes are now on CBA to see what cuts they’ll make to their savings accounts. As the nation’s biggest bank, savings account holders are waiting with bated breath.

“Savings accounts aren’t as straight forward as they used to be. There are plenty of terms and conditions to trip you up but with ongoing savings rates as high as 2.75 per cent, this is a good time to check whether you’ve got the right account for your finances,” she said.

Some of the highest savings account rates on RateCity.com.au 

Bank

Max rate

Conditions

Endeavour Mutual Lifestyle Account

2.75%

Deposit $400/mth. Up to age 35

MyState Bank Bonus Saver Account

2.60%

Deposit $20/mth and make 5 transactions from linked account

RAMS Saver

2.55%

Deposit $200/mth and no withdrawals

Australian Unity Active Saver

2.55%

Deposit $250/mth and no withdrawals

HOW THE BIG BANKS SAVINGS ACCOUNTS CURRENTLY STACK UP 

Big four savings accounts – conditional rates 

Bank

Product

Base rate

Max. rate

How to earn max. rate

ANZ

Progress Saver

0.01%

1.95%

Deposit $10 and no withdrawals per mth.

NAB

Reward Saver

0.11%

1.86%

One deposit and no withdrawals per mth

Westpac

Life

0.60%

2.10%

Make a deposit and end with higher balance per mth

CBA

GoalSaver

0.01%

1.40%*

Deposit $200 and no withdrawals per mth

 *For balances under $50K. CBA offers higher rates for higher balances. Note CBA is yet to move savings rates post the July cash rate cut. 

Big four savings accounts – introductory rates 

Bank

Product

Base rate

Max. rate

Introductory term

ANZ

Online Saver

0.15%

1.95%

3 months

NAB

iSaver

0.11%

2.11%

4 months

Westpac

eSaver

0.15%

2.16%

5 months

CBA

NetBank Saver

0.30%

2.20%

5 months

 Note: CBA is yet to announce changes to its savings accounts, post the July cash rate cut.

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Fact Checked -

This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

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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 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 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 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.

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.

Should I open multiple savings accounts with UBank?

UBank offers customers an opportunity to make the most of their savings by opening multiple savings accounts. Having multiple savings accounts with UBank may be ideal for savers tracking different goals in separate accounts. 

It’s important to note that to earn bonus interest, you will still need to meet the conditions of the UBank savings account every month. If you don’t make these deposits, you will receive the standard interest rate, which is typically lower. 

Keep in mind that you won’t earn bonus interest on your UBank savings account in the month an account is opened and if you open multiple savings accounts with UBank, you'll start earning any bonus interest the following month. 

It's also not yet known how long the special interest rate will hang around for, so please check with your bank for more information. 

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 multiple ING savings accounts?

Yes, you can open up to nine accounts with ING at any particular time. If you’re saving money for various goals, such as buying a car or taking a holiday, you can name each of your multiple ING savings accounts differently.

To get a Savings Maximiser account, you’ll need to deposit more than $1000 every month and make at least five additional purchases. If you also want to grow your savings, from 1st March 2021, you can earn up to 1.35 per cent per annum variable interest on one account with a balance of up to $100,000 when you also maintain an Orange Everyday account.

With ING, multiple savings accounts can help keep track of all your savings goals. All the accounts offer flexible withdrawals where you can withdraw as low or as high as you want without impacting your earning interest rate. However, you can only earn the bonus interest on one account. To apply for a Savings Maximiser account, you can visit ingdirect.com.au.

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.

Should I open a Commonwealth locked savings account?

If you have trouble saving money, a Commbank locked savings account could be a potential solution. A locked savings account won’t let you make withdrawals and as such, it can help you grow your savings balance if you keep topping it up. 

The Commonwealth locked savings account advertises high-interest rates and minimal maintenance fees, along with a host of other incentives that will encourage you not to touch the money. 

The account offers a higher interest rate for each month that you make limited or no withdrawals, as well as regular deposits. 

To qualify for a Commonwealth locked savings account with the advertised features, you will need to fulfil specific criteria such as:

  • Depositing a fixed minimum amount into the account every month.
  • Making a fixed number of deposits each month.
  • Making a minimum or no withdrawals each month.
  • Maintaining a minimum account balance.

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 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.

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.