Westpac shaves savings interest rates by up to 0.20%

Westpac shaves savings interest rates by up to 0.20%

One of the country’s biggest banking groups, Westpac Group, has taken the axe to some savings account rates across its subsidiaries, St. George, BankSA, Bank of Melbourne and RAMS. 

Westpac group has made cuts of up to 0.20 per cent to some introductory and bonus savings interest rates.

The base rates across the group’s accounts remain unchanged, bar RAMS.

Westpac’s 3 per cent saver rate for young people aged 18-29 has not been affected.

Westpac

Westpac has cut the bonus rate on its Life savings account by 0.15 per cent to 0.45 per cent and a maximum possible rate of 0.85 per cent.

The bank also reduced the five-month introductory rate on its eSaver account by 0.15 per cent, taking it down to 0.80 per cent and the maximum rate to 0.85 per cent.

Westpac, which previously had the highest honeymoon savings rate among the big four banks of 1 per cent, has been stripped of the title due to the changes.

Westpac Life

Old max rate (%) New max rate (%) Old bonus rate (%) New bonus Rate (%) Change (%)
1 0.85 0.60 0.45 -0.15%

Westpac eSaver

Old max rate (%) New max rate (%) Old bonus rate (%) New bonus rate (%) Change (%)
1 0.85 0.95 0.80 -0.15%

St. George, Bank of Melbourne, BankSA

Westpac subsidiaries St. George, Bank of Melbourne and BankSA have slashed their bonus rates to 0.70 per cent across their Incentive Saver accounts.

  • For balances under $100,000, the bonus rate has been cut by 0.10 per cent.
  • For balances between $100,000 and $250,000, the bonus rate has been cut by 0.15 per cent.
  • For balances of more than $250,000, the bonus rate has been cut by 0.20 per cent.

The three banks have also trimmed its three-month introductory rates on its Maxi Saver accounts by 0.20 per cent to 0.85 per cent.

Incentive Saver

Tier Old max rate (%) New max rate (%) Old bonus rate (%) New bonus rate (%) Change (%)
<$100k 1.0 0.90 0.80 0.70 -0.10
$100k -$250k 1.05 0.90 0.85 0.70 -0.15
>$250k 1.10 0.90 0.90 0.70 -0.20

Maxi Saver

Old max rate (%) New max rate (%) Old bonus rate (%) New bonus rate (%) Change (%)
1.10 0.90 1.05 0.85 -0.20

RAMS

RAMS has shaved the base rate for most savers by 0.20 per cent, bringing it down to 0.25 per cent. Its bonus rates have not been changed.

RAMS Saver

Tier Old Max Rate (%) New Max Rate (%) Old Base Rate (%) New Base Rate (%) Change (%)
<$500k 1.1 0.9 0.45 0.25 -0.20
$500k – $5m 0.45 0.25 0.45 0.25 -0.20

A Westpac spokesperson said the low cash rate environment was a factor in making today’s interest rate decision.

“When making these changes, we carefully considered how we can continue to support our customers with their savings needs, while managing the commercial pressures of the low interest rate environment,” they said.

“We have limited these decreases to the headline rate on certain products. There have been no changes to the base rate for our eSaver, Life, and Bump accounts.

“Westpac continues to offer a market-leading 3 per cent per annum variable savings rate for customers between 18 – 29 years of age who hold a Westpac Choice and Westpac Life account and meet the Spend&Save bonus interest criteria.”

Savers feel the squeeze

While mortgage holders welcomed the news of an unchanged cash rate from the Reserve Bank of Australia, savers are continuing to feel the squeeze in the low cash rate environment. 

More than 50 banks slashed savings account rates since August 1, including the likes of Commonwealth Bank, Westpac, Macquarie Bank and AMP, RateCity analysis showed. 

The average cut among the banks that reduced their savings rates in the past month was 0.18 per cent. 

Average savings rates have fallen across the board in the past 12 months. The average ongoing maximum rate was 1.14 per cent in 2019 but has since declined to 0.57 per cent.

The average base rate has more than halved, from 0.64 per cent last year to 0.30 per cent today.

Macquarie Bank reduced its honeymoon rate last week by 0.50 per cent to 1.50 per cent on balances of up to $250,000, while AMP removed its welcome rate. 

HSBC also trimmed the interest rate on its Serious Saver account by 0.35 per cent to 1.75 per cent. 

Illawarra Credit Union made the biggest rate cut recorded by RateCity in the past month, shaving 0.60 per cent off its Saver product for those with balances between $50,000 and $100,000.

Despite the savings rate cuts, Australian banks saw a 6 per cent jump in deposits since COVID-19 began, according the latest figures from the Australian Prudential Regulation Authority, as many families batten down the hatches during the pandemic.

Households tucked away $64 billion between March and July, the data showed.

Australians have also been hacking away at their plastic debt, with a 17 per cent drop in credit card balances between March and July, equivalent to more than $6 billion in high-interest debt repaid.

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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

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

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 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.

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 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 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.