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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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.

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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.

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Online-only savings accounts are often less expensive than other savings accounts, though they may not offer the same flexibility, features, or face-to-face service as more traditional savings accounts.

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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.

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