Westpac slashes savings rates on deposit accounts

Westpac has taken the knife to savings rates on its deposit accounts in another financial blow to savers.

Westpac has shaved savings rates on its deposit accounts. Picture: NCA NewsWire/Bianca De Marchi

Westpac savers have been dealt a financial blow with the major bank slashing the savings rates on several of its deposit accounts.

The country’s second largest bank has taken a knife to its deposit accounts, cutting savings rates by 15 basis points, or 0.15 per cent, on its standard eSaver account and its conditional Life account.

Both the conditional and standard savings products now attract a maximum rate of 0.85 per cent.

One year ago, Westpac’s standard savings account was accruing 2.01 per cent, while its conditional account was attracting a maximum rate of 1.95 per cent.

Saving rates have tumbled due to the onset of the coronavirus pandemic, which caused the Reserve Bank of Australia to cut the official cash rate in March to 0.25 per cent.

A lower cash rate induces a lower interest rate environment which puts downward pressure on a bank’s ability to maintain rates at current levels.

RateCity research director Sally Tindall said the majority of savings products were below 1 per cent, with the average annual return at 0.57 per cent.

“Friday’s cuts are a blow for Westpac customers who were hanging on by the skin of their teeth to a savings rate that started with a one,” she said.

“But these cuts from Westpac aren’t surprising. This low-rate environment could push some Australians into riskier alternatives in order to make ends meet.”

RateCity research director Sally Tindall says low interest savings rates could push Australians into riskier alternatives. Picture: Supplied

NAB has the highest ongoing maximum rate on a conditional savings product at 0.9 per cent, while ANZ has a rate at 0.85 per cent. Commonwealth Bank has an ongoing rate of 0.5 per cent.

CBA and NAB are advertising the highest standard rate at 0.95 per cent, while ANZ has a rate of 0.80 per cent.

Westpac said the rate cuts were decided following considerations of the commercial challenges the current interest rate environment was posing for the wider banking industry.

“We have limited these decreases to the headline rate on certain products. There have been no changes to the base rate for our eSaver, Life, and Bump accounts,” a Westpac spokeswoman said.

Westpac is offering young customers an interest rate of 3 per cent through its conditional Life savings account.

“Westpac’s done the right thing by young Australians, keeping their Life saver rate intact at a market-leading 3 per cent, which is five times higher than the average rate,” Ms Tindall said.

“It’s one of the few standouts in what is otherwise a demoralising savings landscape.”