Westpac has become the third major bank to reduce its savings rates following the RBA’s July cash rate decision, with Commonwealth Bank the remaining major bank to announce its changes.
On Friday (19 July), Westpac reduced its savings rates by 15 basis points for eSaver accounts and up to 20 basis points for Life account holders.
Customers with an eSaver account will now receive 2.16 per cent interest for the first five months before moving to an ongoing rate of 0.15 per cent.
Those with a Life account will see rates drop by 20 basis points. However, a bonus rate of the same amount has also been applied. This means that customers who make one deposit a month, and end the month with a higher balance than they started with, will still continue to receive the same maximum rate (2.10 per cent).
The move follows on from ANZ and NAB also having changed savings rates off the back of the central bank decision to reduce the official cash rate to 1 per cent this month.
As such, the base rate for ANZ Online Saver is now 0.15 per cent (with a max rate of 1.95 per cent), NAB’s iSaver is 0.11 per cent (max rate 2.11 per cent), while CBA’s NetBank Saver has not yet been impacted by a change. This means that the base rate is 0.30 per cent and its max rate is 2.20 per cent.
RateCity.com.au research director Sally Tindall commented that the Westpac change would leave eSaver customers “bitterly disappointed to find out they’ll be earning just 0.15 per cent interest on their savings on an ongoing basis” while Westpac customers who are regular savers “have been rewarded”.
“Customers who can make one deposit a month and keep building up their savings balance will get the same maximum rate. This is a pretty big olive branch in what is an otherwise hostile environment for savers,” she said.
“All eyes are now on CBA to see what cuts they’ll make to their savings accounts. As the nation’s biggest bank, savings account holders are waiting with bated breath.”
Ms Tindall noted that savings accounts “aren’t as straightforward as they used to be”.
[Related: Westpac cuts fixed rates by up to 70bps]