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Westpac steps up for young Australians as CBA cuts intro savings rates

Westpac steps up for young Australians as CBA cuts intro savings rates

Australia’s second largest bank, Westpac, has today launched a new ongoing savings rate of 3 per cent for Australians aged 18 to 29 years.

The rate, which is available on balances up to $30,000 for both new and existing customers, is the highest savings rate for young adults with balances over $1,000.

To qualify for the maximum rate, customers need to make sure their savings account balance is higher at the end of the month and make five or more transactions on a linked transaction account.

RateCity analysis shows that an eligible saver who switches from a Westpac Life Account to this new rate would earn $433 extra in interest over the course of a year. This is based on a starting balance of $20,000, depositing $200 per month.

Interest on $20K deposit, with $200 added monthly:

AccountMax rateInterest in first year
Standard Westpac Life account

1.00%

$211

Westpac Life (ages 18-29, up to $30K)

3.00%

$644

Difference

2.00%

$433

Notes: based on a starting balance of $20,000, adding $200 to the account on the 15th of each month with interest calculated daily and accrued monthly. Assumes rates remain unchanged. Assumes other eligibility criteria have been met. In months where customers don’t increase their balance but still make five transactions, the rate is 2.40 per cent.

CBA cuts savings rates

Westpac’s boost for young savers comes as CBA cuts two popular savings accounts:

  • The introductory rate on CBA’s Netbank account has been cut by 0.05 per cent to 1 percent. The ongoing rate of 0.05 per cent remains unchanged.
  • The maximum rate on CBA’s Youthsaver account has been cut by 0.10 per cent (this includes an increase to the base rate of 0.05 per cent).

RateCity research director Sally Tindall said the new offer from Westpac could help young Australians reach their savings goals faster.

“It’s remarkable to see a big four bank boost savings rates for young Australians at a time when most banks are slashing them,” she said.

“This new rate from Westpac is unlike any on the market. The highest ongoing savings rate for adults is just 1.85 per cent, while the highest rate kids savings account on our database is 3.50 per cent, but it’s for ages up to 25 and only payable on balances up to $1,000

“A lot of young Australians are doing it tough during COVID-19, but research shows it hasn’t deterred them from saving. If anything, it’s made them more focused.

“It’s great that Westpac has recognised this and is actively helping them on their journey. I hope this record high rate can withstand the pressures of the low rate environment,” she said.

Big four bank rates

Standard savings accounts:

BankProductIntro rate Ongoing rateIntro term
CBANetBank Saver

1.00%

0.05%

5 mths
WestpaceSaver

1.00%

0.05%

5 mths
NABiSaver

1.05%

0.05%

4 mths
ANZOnline Saver

0.80%

0.05%

3 mths

Conditional savings accounts:

BankProductBase rate Max rateConditions
CBAGoal Saver

0.10%

0.50%

Deposit $200+/mth, no withdrawals
WestpacLife

0.40%

1.00%

Balance needs to be higher every mth
NABReward Saver

0.05%

1.00%

1+ deposit and no withdrawals per mth
ANZProgress Saver

0.01%

0.85%

Deposit $10+/mth, no withdrawals

Did you find this helpful? Why not share this news?

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 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 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 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.

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.

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.

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)

Do banks run credit checks on savings accounts?

When you apply to open a new savings account, some providers may conduct a credit check, meaning that they will ask a credit bureau for your credit history. This isn’t always the case on savings accounts though and depends on the provider, as you aren’t borrowing money. 

As you are opening a savings account and not borrowing funds, this credit check is considered a soft inquiry and should not affect your credit score. If the bank has run the credit check, you can often still open a savings account even if you have a poor score, provided you meet other requirements. 

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.

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.