The “Big 4” banks often recycle their products every few years. Westpac is no stranger to this, releasing new consumer savings account products every few years, and then “grandfathering” their old products (which means removing them for sale for new customers, and moving existing customers on these products into their “back book”).
They do this for 2 main reasons:
- So they can try to stay relevant, releasing shiny new products with shiny new marketing campaigns in an attempt to attract shiny new customers
- So that they can slowly reduce the interest rates on grandfathered products while no one is noticing in order to increase their margins
It gets worse. Often the holders of grandfathered products are those who don’t shop around every few years and realise they could be getting a better deal, or who aren’t aware of their current interest rate. Unfortunately these are often customers in the older age segment (think your grandparents or retirees) - no wonder they call it “grandfathering”!
Westpac (and other Big 4 banks) know this, and take advantage of these customers by slowly reducing the interest rates on grandfathered products over the years until they reach close to zero. And the reason they don’t just make the interest rates actually 0%, is because the products are called “savings accounts” and so legally, they must still earn some interest to meet the product description - or in the case of Westpac’s “One Save” product, 0.01%!
So you have a situation with elderly people on these products (who either aren’t aware, or not of sound enough mind to understand), thinking all their life savings are working hard for them earning money in a Westpac savings account, when in fact they are earning just pennies on the dollar! Pretty shonky business practice if you ask me…
If you don’t believe me, just check… call up Westpac and say your grandparent has a “One save” savings account and you want to know its current interest rates. You’ll be very surprised…
