The NAB-owned digital bank will hike the interest it will pay on its bonus interest Save accounts to 5.5% p.a. for amounts up to $100,000 under its new tiered system.
Account balances from $100,000 to $250,000 will earn 5% p.a. interest while amounts over $250,000 will earn no interest from 1 July.
Ubank is currently paying a 5.10% p.a. variable interest rate on all amounts up to $250,000.
The rate increase now thrusts Ubank among the market leaders such as ING's Savings Maximiser, ME Bank, and Bank of Queensland, as seen in the comparison table below.
Although Ubank's headline rate has been boosted by 40 basis points, the new tiered rate system effectively means it represents a 10 basis point boost on balances to $250,000, now 5.20% p.a. overall.
The news comes after it rankled loyal customers earlier in the month by tweaking the criteria on how to attain the top rate and eliminating some features of the account.
No more external transfers
The trade-off is that account holders will no longer be able to make external payments from their Save accounts and will have to switch to Spend or Bill accounts before 1 July.
The payments being disabled from Save accounts include direct debits, PayTo, BPay, and BSB and account payments.
The monthly deposit to qualify for bonus interest will also jump to $500 from $200 from 1 July.
The deposit must come from an external account, as internal transfers between ubank accounts won't qualify.
Well received news
UBank made the new rates announcement on Tuesday after earlier notifying customers it was introducing a tiered interest rate schedule for its Save accounts.
The move to install a higher interest rate of 5.5% p.a. for amounts up to $100,000 has generally received the thumbs up from ubank savers on forums and social media.
Some had been unhappy with the announced changes to a tiered interest rate system and the end of external transfers from Save accounts, while others say the rate boost delivers sweeter news.
Ubank rationale
On Tuesday, ubank said it was responding to research among its target market, Gen Z and Millennial customers, that their top three most important banking features were:
- low to no monthly fees (49%)
- competitive interest rates (39%)
- an easy-to-use app (33%)
Ubank's chief product and growth officer Andrew Morrison said the new bonus interest rate will be one of the most competitive on the market.
"It's an awesome opportunity for customers, new and existing, to make their money work harder for them," he said.
Macquarie's savings account is currently offering an introductory fixed rate of 5.35% p.a. on balances up to $250,000 for four months before reverting to a 4.75% p.a. variable rate on balances up to $1 million.
ANZ Plus is offering 4.9% p.a. interest for ANZ Save balances under $250,000 although it comes with notice that there will be changes to the criteria that may affect the interest earned from 1 September.
The savings account news comes after regulators' push to reform consumer banking, after the ACCC found in December that up to 71% of customers don't earn the top rates on savings accounts because they fail to meet the deposit criteria.
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Need somewhere to store cash and earn interest? The table below features savings accounts with some of the highest interest rates on the market.
Image by Bruce Mars on Unsplash
Denise Raward
Harry O'Sullivan
Jacob Cocciolone