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:
|Account||Max rate||Interest in first year|
|Standard Westpac Life account|
|Westpac Life (ages 18-29, up to $30K)|
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:
|Bank||Product||Intro rate||Ongoing rate||Intro term|
Conditional savings accounts:
|Bank||Product||Base rate||Max rate||Conditions|
|Deposit $200+/mth, no withdrawals|
|Balance needs to be higher every mth|
|1+ deposit and no withdrawals per mth|
|Deposit $10+/mth, no withdrawals|