Westpac slashes savings interest rates, but Life account still tops market

Senior News Journalist · 17 September 2021
Westpac’s latest cuts to savings accounts see its market-leading savings rate for young people drop from the high of 3% down to 2.50%.
Westpac savings cut September 21
Westpac has cut savings interest rates for the second time this year. Image: Marlon Trottmann/Shutterstock.com.

Westpac and its subsidiaries – St.George, Bank of Melbourne and BankSA – all reduced savings account interest rates on Friday.

The biggest cut of 0.50 percentage points was felt by 18- to 29-year-olds with a Westpac Life account, who could previously earn up to 3% if they met all the interest criteria each month. That rate is now 2.50%.

The new rate is in line with Bank of Queensland’s (BOQ) age-specific offer of 2.50% on its Fast Track Starter account for 14- to 24-year-olds.

Canstar finance expert Mickenbecker said the 3% Life interest rate for young adults had been an outlier in the market, with an interest rate way above any other savings account, and even after the decrease it retains a share of top position with BOQ.

“The savings cuts will disappoint first home savers in particular who are already battling exploding property prices which keep the target moving further away,” Mr Mickenbecker said.

Retirees haven’t emerged unscathed either, with Westpac also cutting its tiered 55-and-over Retired account by 0.05 percentage points to 0.15% for balances under $250,000, and 0.10 percentage points to 0.30% for balances above $250,000.

And it was a mixed bag for term deposit customers, with Westpac cutting shorter terms by up to 0.10 percentage points, while some longer terms saw rates increase by up to 0.05 percentage points.

Westpac’s subsidiaries St.George, Bank of Melbourne and BankSA also all cut their savings rates by up to 0.15 percentage points.

Here’s where the Westpac Group savings rates sit after today’s cuts:

Westpac’s new savings rates

  • eSaver: 0.30% after a 0.10 percentage point cut
  • Life (all ages): 0.30% after a 0.10 percentage point cut
  • Life (18 to 29 years, up to $30,000 balance): 2.50% after a 0.50 percentage point cut
  • Bump: 0.55% after a 0.10 percentage point cut
  • 55+ and Retired: 0.15% for balances under $249,999 and 0.30% for balances greater than $250,000, after cuts of 0.05 and 0.10 percentage points.

St. George, Bank of Melbourne and BankSA’s new savings rates

  • Maxi Saver: 0.30% after a 0.15 percentage point cut
  • Incentive Saver: 0.30% after a 0.15 percentage point cut
  • 55+ and Retired: 0.15% for balances under $249,999 and 0.30% for balances greater than $250,000, after cuts of 0.05 and 0.10 percentage points

Where to find the top savings rates in a low-rate market

Since the start of this year, 51 providers on Canstar’s database have cut 86 savings account interest rates by an average of 0.22 percentage points, based on rates available for deposits of $10,000.

While savings rates are quite low across the board, there are still rates available up to 1.50% for savers of any age.

“Savings with authorised deposit-taking institutions are government-guaranteed up to $250,000, so savers don’t necessarily need to limit their consideration to bank brands they recognise,” Mr Mickenbecker said.

Top savings interest rates on Canstar’s database

  • 2.50%: Westpac Life for 18-29 year olds (0.15% base rate + 2.35% bonus rate)
  • 2.50%: BOQ Fast Track Starter for 14-24 year olds (0.05% base rate + 2.45% bonus rate)
  • 1.50%: Virgin Money Boost Saver (0.10% base rate + 1.10% bonus rate + 0.30% introductory rate)
  • 1.35%: Rabobank Australia High Interest Savings Account (0.25% base rate + 1.10% introductory rate)
  • 1.35%: ING Savings Maximiser (0.05% base rate + 1.30% bonus rate)

Source: www.canstar.com.au – 17 September, 2021. Based on savings accounts on Canstar’s database, with rates based on a deposit balance of $10,000. Introductory rate refers to an introductory promotional rate that is available for a limited time from account opening. Bonus rate refers to a conditional bonus rate that is paid when conditions are met each month. List sorted in descending order by total rate, followed by base rate. Check with individual providers for more details.

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This content was reviewed by Sub Editor Tom Letts and Deputy Editor Sean Callery as part of our fact-checking process.

Ellie McLachlan is responsible for leading and breaking financial news on mortgages, money and much more. Ellie studied a Bachelor of Journalism and Arts at UQ and has worked at major metropolitan and regional news organisations.

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