Commonwealth Bank and Westpac the first major banks to cut savings rates in 2021


Although there has been a “massive increase” in the amount of savings held by Australian households, two of the country’s largest banks have moved to cut interest rates on their savings accounts today.

CBA and Westpac cut savings rates
Commonwealth Bank and Westpac have cut interest rates on savings accounts on 22 January, 2021. Image source: Shutterstock.

Commonwealth Bank (CBA) was the first major bank to reduce savings account rates in 2021, after cutting a further 0.05 percentage points off its NetBank Saver, GoalSaver and YouthSaver accounts.

In the past year, customers with deposits of up to $50,000 in a NetBank Saver or YouthSaver account have seen a total of 1.15 percentage points wiped off the interest rate, and 0.80 percentage points from the GoalSaver account.

The new interest rates after the most recent cuts, effective Friday, 22 January, are:

  • NetBank Saver: 0.50% (0.05% base rate + 0.45% introductory rate for the first five months)
  • GoalSaver for all balances: 0.45%  (0.05% base rate + 0.40% conditional bonus rate)
  • YouthSaver for balances up to $50,000: 0.70% (0.05% base rate + 0.65% conditional bonus rate)

Fellow big four bank Westpac also announced savings account rate cuts today, both on its own products and those of its subsidiaries St. George, Bank of Melbourne and BankSA. The new savings account rates for the Westpac group, effective Friday, 22 January, are:

  • Westpac eSaver: 0.40% (0.05% base rate + 0.35% introductory rate for the first five months)
  • Westpac Life: 0.40% (0.20% base rate + 0.20% conditional bonus rate), or 3.00% for customers aged 18-29 (0.20% base rate + 0.20% conditional bonus rate, plus an additional 2.60% conditional bonus rate)
  • Westpac Bump Savings: 0.65% (0.35% base rate + 0.30% conditional bonus rate)
  • St. George/Bank of Melbourne/BankSA Maxi Saver: 0.45% (0.05% base rate + 0.40% introductory rate for the first three months)
  • St. George/Bank of Melbourne/BankSA Incentive Saver for balances below $100,000: 0.45% (0.20% base rate + 0.25% conditional bonus rate)

The cuts announced today come shortly after CBA’s own economic research team announced on Thursday that there had been a “massive increase in savings” recently. Data from CBA bank accounts showed the average total savings balance per household was up 16.7% in December, compared to a year prior. CBA did note, however, that the fact some Australians dipped into their super early last year likely contributed to this jump.

CBA savings accounts chart
Source: Commonwealth Bank Economic Update, 21 January 2021.

Recent Treasury data has similarly shown the extent to which Australians have amassed savings, with more than $200 billion in household and business savings recorded compared to the start of 2020, due to less spending during the pandemic and the boost to bank accounts from temporary government support schemes like JobKeeper.

Unfortunately, savings account rates have tumbled. Canstar’s database shows regular savings accounts – including those with introductory periods – are now tracking at an average interest rate of 0.45%, while bonus savings accounts, where you can earn extra interest by meeting certain criteria, are at 0.74% on average.

CBA and Westpac join Bank of China, Bank of us, Teacher’s Mutual Bank and its subsidiaries, MyState Bank, Greater Bank and Summerland Credit Union in cutting savings rates in 2021 so far, according to movements recorded in Canstar’s database of savings accounts.

Their big four rivals ANZ and National Australia Bank have so far held off from cutting savings rates in the new year.

Canstar finance expert Steve Mickenbecker said there had been a “relentless slide” in savings rates over the past two years, and there could be more cuts to come in 2021.

He said the low rates would force customers to look for better returns and make their money work harder.

“Everything is online these days, so it’s not like you have to settle for a bank that’s on your street corner,” Mr Mickenbecker said.

“People have got to move their money every time the introductory period runs out, or they have to find an account that has bonus interest conditions that they can meet every month.”

Some bonus savings accounts allow the flexibility for customers to make as many withdrawals as they like during the month, while others do not pay bonus interest if a customer makes too many withdrawals or if the account balance is lower at the end of the month.

Fortunately for savvy savers, there are still competitive savings rates available for savings accounts with short-term introductory offers, and bonus accounts.

Top 5 savings account rates on Canstar’s database

Provider Account Base Rate Bonus Rate Promo Rate Promo Period Total Rate
Rabobank Australia High Interest Savings Account 0.30% 1.45% 4 months 1.75%
Macquarie Bank Savings Account 1.20% 0.15% 4 months 1.35%
ING Savings Maximiser* 0.05% 1.30% 1.35%
Heritage Bank Online Saver 0.65% 0.65% 4 months 1.30%
Bank of China Online Saver 0.40% 0.90% 4 months 1.30%

Source: – 22/01/2021. Based on savings accounts on Canstar’s database, with rates based on a deposit of $10,000. Table sorted in descending order by total rate, followed by base rate. Total rate includes the base rate plus any conditional bonus or introductory promotional rate. Conditions may apply to bonus and promo rates, refer to the provider for more details. *The ING Savings Maximiser account’s bonus interest conditions will change from 1 March, 2021.

The comparison table below shows some of the savings accounts on Canstar’s database for a regular saver in NSW. 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 or other terms and conditions before making a decision.

This article was reviewed by our Sub Editor Tom Letts before it was updated as part of our fact-checking process.

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