Savers SAVED by new online banks

MEDIA RELEASE 12 September 2019

Market leading rates herald new era of mobile app bank accounts

Two new online banks, launched this week, are helping to bring relief for savers hammered by grim low rates and stringent rules on traditional savings accounts. The online banks have market leading savings rates, easy savings rules and very few fees.

“Millions of Aussies put up with short introductory periods of bonus interest or stringent savings account terms and conditions like making minimum deposits of $200 with no withdrawals in a month,” said Vadim Taube, CEO of leading Australian financial comparison site, InfoChoice.com.au.

“And that has led many people to throw up their hands and resign themselves to getting low interest, even below the inflation rate, on their savings.

“It’s quite refreshing to hear the new banks talk about being ethical, transparent and customer-focused,” said Mr Taube, “And it’s a relief for savers to get a reasonable rate without having to jump through almost impossible hoops.”

Major banks paying NO interest to savers

Banks are increasingly paying almost-zero interest on billions of dollars of Aussie savings

Meanwhile, Australia’s traditional banks and credit unions are paying zero interest or practically zero interest on almost 20 per cent of all deposits held, the Reserve Bank reported.

And around half of all deposits held by Australia’s major banks pay interest of 1.25 per cent or less. The current inflation rate is 1.60 per cent pa.

The major banks reported in June 2019 that they “paid no interest on just under 10 per cent of the value of their deposits,” said the Reserve Bank.

“The share of deposits that paid some interest, but less than 50 basis points (0.50%), was also a little under 10 per cent in June,” the RBA said. That is up from around 5 per cent of deposits in February, reported the RBA.

Aussie households currently have $962.7 billion in deposits held by authorised deposit taking institutions according to the latest data from the Australian Prudential Regulatory Authority.

New online banks = new deal for savers

Online bank 86 400 is offering savers a maximum bonus rate of 2.50 per cent pa (base rate 0.4 per cent). To get the bonus rate, you just need to deposit $1,000 per month into a linked 86 400 transaction account.

UP, owned by Bendigo Bank, is paying a maximum bonus rate of 2.50 per cent pa on the UP Saver account. 5 or more card purchases per month must be made from your linked everyday account. No monthly deposits required.

Rival online bank Xinja has just been granted a full banking license this week and is inviting Aussies to sign up to its wait list for transaction and savings accounts. 28,000 Aussies have already done so. Xinja founder Eric Wilson is promising the new bank will be “fun and unbanky.”

Another online-only institution, Volt Bank says “We’ll be going live soon” and is inviting consumers to join its early access list. Volt promises that its savings account will have “no catches, you’ll earn interest no matter how much you put in or take out.”

NAB’s online bank UBank is still offering one of the most competitive savings account deals around with a high base rate of 1.35 per cent and a competitive maximum rate of 2.41 per cent, when you deposit $200 per month into a linked account.

For more information on Savings account rates, data and commentary, please contact:

Jason Bryce, Media Manager on 0428 777 727 jason.bryce@infochoice.com.au

For more comments, please contact: Vadim Taube, Chief Executive on 0403 580 794

Keep up to date with the latest RBA rates outlook at InfoChoice.

* InfoChoice compares financial products from 145 banks, credit unions and other financial institutions in Australia. InfoChoice does not compare every product in the market. Some institutions may have a commercial partnership with InfoChoice. Rates are provided by partners and taken from financial institutions websites. We believe all information to be accurate on the date published. InfoChoice strives to update and keep information as accurate as possible.

** Comparison rate is based on a secured loan of $150,000 over the term of 25 years. WARNING: These comparison rates apply only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and costs savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan

***Excludes accounts with introductory honeymoon maximum bonus rates, notice saver accounts and accounts that are not generally available to all Australian residents

InfoChoice is a leading Australian comparison website for retail banking and personal finance products. We’ve been helping Aussies find great offers on credit cards, home loans, savings accounts, term deposits, personal loans and car loans for over 25 years. Our mission is to help consumers make an informed purchasing by bringing together the most comprehensive list of financial products on the market today.

At InfoChoice, we strive to be:

•           Comprehensive. We compare more than 3500 individual products from 145 providers within Australia to offer you the best value.

•           Informative. We know how important it is for you to crunch the numbers before buying. Our calculators help you understand the cost of different products over the long term and show you the potential savings.