Bankwest: A potential 3.1 million retirees in Australia are set to benefit from the new Bankwest Smart eSaver offering a variable rate of 5.00 per cent p.a. - one of Australia's highest variable online rates.
While first homebuyers and mortgage customers are reaping the benefit of forty-five year low interest rates, many semi-retired and retired customers are seeing their savings eroded by the low interest rates on offer.
More than 140,000 retired Australians live directly off savings or other assets, with many more relying on interest to supplement their income.
With the average savings account offering 2.71 per cent, thousands of Australians are seeing valuable income disappear from falling interest rates and low superannuation returns.
Bankwest estimates a customer with $50,000 in a savings account has seen a decrease of 4 per cent in potential interest in the last twelve months. This accounts to an average of $2,034 in lost interest earned over a twelve month period.
Bankwest has today launched a new online savings account called the Bankwest Smart eSaver that offers a competitive variable Smart Rate of interest designed to reward customers for saving as follows:
Smart Rate 5.00 per cent p.a. variable
Standard Rate 3.25 per cent p.a. variable
The variable Smart Rate of 5.00 per cent p.a. can be earned in any month the customer makes no withdrawals. If a withdrawal is made in any month the account will revert to the variable Standard Rate of 3.25 per cent p.a. for that month.
Bankwest Head of Mortgages and Savings Paul Vivian said low interest rates could force savers into riskier investments in search for better returns.
"We don't want customers to sacrifice safety for higher interest rates, which is why we've developed the Bankwest Smart eSaver that encourages customers to save and offers a high variable interest rate of 5.00 per cent," Mr Vivian said.
Bankwest estimates more than 69 per cent of retirees have a regular savings or transaction account, with many relying on the interest from their savings as a top-up to their weekly budget or a source of income.
"Some retirees have experienced a double blow as they've just retired and lost money on their superannuation and in addition to this, are not getting the high returns we saw last year on their savings account," Mr Vivian said.
Australian household savings ratios are at an 18 year high, the highest since the last recession in 1990-91. In 2008 household savings hit a record of $23.6 billion (ABS).
"It's good news that Australians are saving again but that doesn't mean much if you aren't getting the best rate in the market," Mr Vivian said.
"If you haven't had a look at the rate you are getting, now is the time to do so as customers can't afford to be complacent about interest rates in a time of downturn," he said.
Mr Vivian said Bankwest was still focussed on injecting more competition into the Australian banking and finance market.
"Low interest rates should not equate to customers looking for higher but riskier investment strategies," he said.
Bankwest Chief Economist Alan Langford predicts interest rates will fall further in 2009 in response to a worsening economy.
"Even though the RBA held the cash rate steady at 3.25 per cent p.a. this month, the darkening global economic backdrop is likely to require further easing of monetary policy in coming months, most likely as soon as April," he said.
With no account maintenance or access fees, Bankwest's Smart eSaver requires a linked account for opening and funds transfers.
The Bankwest Smart eSaver offers a guarantee that the Standard Rate will at least match the RBA's cash rate until 2011.
