Westpac joins ANZ in cutting savings rates this week

Westpac just reduced its savings account rates even lower, after cutting them only six weeks ago. In this historically low interest rate environment, consumers may have to cast the net wider from the major banks to earn interest on their hard-earned savings.
Westpac savings cuts October 16 2020
Westpac and its subsidiaries have taken savings rates lower. Have you compared? Image source: Vitalii Tairov.

Westpac cut the introductory and bonus interest rates on its savings accounts for adults and youth by 0.10 percentage points today. The new rates, effective today, are:

  • 0.75% – eSaver (0.05% base rate + 0.70% introductory rate for the first five months)
  • 0.75% – Life (0.40% base rate + 0.35% bonus rate when you meet the bonus conditions each month)
  • 1% – Bump, for under 18s (0.55% base rate + 0.45% bonus rate when you meet the bonus conditions each month)

Westpac also increased the Choice Spend and Save bonus rate on its Life account for people aged 18 to 29 years old by 0.10 percentage points, but the total rate for those young people remains the same, at 3%, when they meet the full conditions.

The bank’s subsidiaries – St. George Bank, Bank of Melbourne and Bank SA – also reduced savings accounts rates by 0.10 percentage points today.

Both Westpac and its subsidiaries cut term deposit rates as well, by between 0.15 and 0.20 percentage points.

The cuts come hot on the heels of ANZ and some neobanks reducing savers’ rates earlier this week.

It’s the second time recently that Westpac has reduced savings interest rates, having made cuts on 4 September of 0.15 percentage points.

Canstar finance expert Steve Mickenbecker said cuts from Westpac today and ANZ on Wednesday would be felt hard by the large portion of Australians who have their savings sitting in one of the big four banks.

“This is Westpac’s second cut in six weeks and there is no sign that savers are at the bottom of the trough; more bad news is likely from their bank,” Mr Mickenbecker said.

He said the neobanks were a hot commodity for interest earnings when they first launched into the market, offering competitive rates in a downwards trending market.

“With Xinja, 86 400 and Volt all reducing the interest earnings on savings this week, these digital-only banks are no longer offering some of the top rates.

“Savers will be thinking that now is the time to move further into alternative investments like shares and property, but will have to keep an eye on the higher risk this entails and avoid putting all of their eggs in one basket.”

At a speech on Tuesday about Australia’s recovery from the recession, Reserve Bank Governor Philip Lowe indicated interest rates would stay low for years and even put further cash rate cuts on the table, spelling more bad news for savers and self-funded retirees.

“We do not expect to be increasing the cash rate for at least three years,” Dr Lowe said.

A falling cash rate is typically reflected in the interest rates on consumer accounts, leading to lower rates on savings accounts, term deposits and home loans.

On the upside, there are rates as high as 2% still available for conscientious savers willing to chase introductory rates by moving accounts every few months or sticking to bonus conditions.

Where to find the top savings account rates on Canstar’s database

  1. 2% – Rabobank Australia’s High Interest Savings Account (0.55% base rate + 1.45% introductory rate for the first four months)
  2. 1.60% – Heritage Bank’s Online Saver (0.80% base rate + 0.80% introductory rate for the first four months)
  3. 1.60% – Bank of China’s Online Saver (0.60% base rate + 1% introductory rate for the first four months)
  4. 1.60% – Up’s Up Savers (0.10% base rate + 1.50% bonus rate)
  5. 1.55% – Citi’s Online Saver (0.35% base rate + 1.20% introductory rate for the first four months)
  6. 1.55% – ME Bank’s Online Savings Account (0.10% base rate + 1.45% bonus rate)

Source: www.canstar.com.au – 16/10/2020. Based on savings account rates on Canstar’s database for a deposit amount of $10,000. Includes flexible savings accounts that allow flexible access to balance whilst paying an interest rate and bonus savings accounts that pay a bonus rate when conditions are met each month. Top 5 selected and products listed in descending order by total rate, followed by base rate. Total rate includes the base rate plus any applicable conditional bonus rate or promotional rate. Conditions may apply to bonus and promotional rates; contact the relevant company for full terms and conditions.

This article was reviewed by our Sub Editor Jacqueline Belesky before it was published as part of our fact-checking process.

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