Westpac will offer adults aged 18 to 29 who have a Westpac Life savings account a variable savings rate of up to 3% from 8 July, 2020.
Eligible customers will be able to access the 3% rate on their savings when they meet the full conditions, which first of all means increasing their savings balance each month and keeping it above $0 at all times in order to earn 1% interest – made up of 0.40% base interest and 0.60% bonus interest.
Then they need to make five eligible purchases a month with their debit card, attached to a Westpac Choice transaction account, to earn an additional 2% bonus interest.
The 2% bonus interest only applies on balances up to $30,000 though, so any savings greater than that amount could not earn the full 3% rate.
Even if customers couldn’t increase their savings balance each month, they could earn up to 2.40% interest by still transacting five times in the month (0.40% base rate, plus the 2% bonus interest).
Westpac’s new 3% interest rate makes it the highest savings rate on Canstar’s database at this time, with the next highest in line a promotional interest rate of 2.26% at Macquarie Bank.
On the same day that Westpac introduced this savings account rate, its rival and Australia’s largest bank opted to slash savings rates.
The Commonwealth Bank reduced the introductory rate on its Netbank saver account by 0.05 percentage points, taking the total rate to 1%.
It also cut the total earn rate for under-18 customers on its Youthsaver account by 0.10 percentage points for balances up to $50,000, taking the total rate down to 1.20%.
Canstar finance expert Steve Mickenbecker said this was a tale of two banks when it comes to young savers.
“Commonwealth Bank has cut its savings rates for kids and adults alike, while Westpac has smashed the paradigm with a market-leading savings rate that is a full leap ahead of the competition.”
Both banks’ moves came within less than 24 hours of the Reserve Bank of Australia (RBA) board meeting yesterday, where it decided to leave the official cash rate on hold at 0.25%.
Mr Mickenbecker said the cash rate meant a lot less these days – both to savings and home loan interest rates – with one major bank reducing savings rates and the other increasing them a day after the RBA board met.
Westpac released the news of its new savings rate offer alongside research – based on two surveys of more than 12,000 Australians in total – that showed 49% of respondents planned to save more than they did before COVID-19 and 85% chose to cut back their spending or hold off big purchases to protect their savings.
The findings also revealed Australians under 30 were three times more likely than older generations to have lost work, and nearly twice as likely to have taken a pay cut or be working reduced hours due to the pandemic.
The comparison table below shows some of the Savings Accounts on Canstar’s database for a regular saver in NSW with links to the providers’ websites. The results shown are based on an investment of $100,000 in a personal savings account and are sorted by Star Rating (highest to lowest), then provider name (alphabetically). For more information and to confirm whether a particular product will be suitable for you, check upfront with your provider and read the Product Disclosure Statement before making a decision.