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Welcome to week 2 of the ‘Mozo Answers Question of the Week’. Our Answers forum has been bombarded by questions about deposits this week, mainly centering on what the best rates are for both savings and term deposit accounts as well as the respective benefits of choosing a term deposit over a savings account and vice versa.

Lets start with savings accounts, where there are a couple of standouts well worth looking at. First off, BankWest’s “Regular Saver” has no monthly fee and a market leading rate of 7.0%. It’s an amazing rate, however you can’t make any withdrawals and you can only deposit up to $500 a month. If you can’t stick to those parameters, UBank’s USaver is a great option. It’s got a fantastic interest rate of 6.51% as long as you set up an automatic savings plan of at least $200 a month, 6.01% if you don’t. There’s no monthly fee, you can withdraw and deposit as much as you like and there are no balance conditions either.

Turning our focus towards term deposits, as a result of some pretty fierce competition there are a lot of attractive rates out there at the moment. To get the best out of a term deposit you’re better off giving it some time – for example, to get a rate of 6.0% or over you’ll have to invest your money for a minimum of 6 months. Take a look at the table below to see some of the best rates out there on various terms:

As you may have noticed, we here at Mozo have just launched Mozo Answers, a brand spanking-new forum platform where anyone can start up or get involved in a range of money conversations. As an offshoot, I’ve decided to launch a ‘question of the week’ style column, where I’ll take the best or most commonly asked question of the week and attempt to provide an in depth answer myself.

This week’s about the young ones. It seems like there are a lot of forward-thinking parents looking to setup childrens’ savings accounts for a myriad of purposes. Whether you’re saving for university, angling for tax breaks or simply looking to teach your kids the value of saving, here’s my take on the best accounts in the market.

First off, let’s look at kids savings accounts. The big fish at the moment is BankWest’s Kids’ Bonus Saver, which offers a jaw-dropping 10%. Like most other kids accounts however, there are number of conditions that affect how much you can earn. The key flaws with the account are that you lose interest if you make any withdrawals, there is a maximum deposit of $250 a month and that after one year all your money is swept into a different BankWest account that earns a paltry 1%. These sorts of deposit and withdrawal conditions are commonplace amongst kids accounts, and as I’m about to show you, they can make a considerable difference.

In terms of simplicity, flexibility and interest my personal vote would have to go to Suncorp’s Kids Saving account, which allows 1 withdrawal per month and earns 5.75% interest. As a testament to the power of small print, despite it having a markedly lower headline rate than BankWest’s offering, you’d stand to make $209 more interest with Suncorp (assuming a regular monthly deposit of $250 with no withdrawals).

If your child is over 12 then there’s an ever better option. RaboDirect’s High Interest Savings has a great, market-leading standard interest rate of 6.0%, no deposit conditions and no monthly fees. It’s available to anyone over 12 years of age and as it’s not a kids account per see, your child can keep using the account well into adulthood.

All up, the key message to take away is to look for a flexible account with a good headline rate, keeping well abreast of the small print in the process. Follow these rules and your child may no longer need to hit you up up for pocket money (not likely mind you!).

Got any more questions on kids accounts? Or anything else for that matter? Ask away on Mozo Answers.

“I want to stand as close to the edge as I can without going over. Out on the edge you see all the kinds of things you can’t see from the center.”
Kurt Vonnegut

On the surface, seminal author Kurt Vonnegut and credit card giant American Express don’t seem to have much in common. Upon deeper reading though, there are a number of similarities. Both are American. Both were irrevocably shaped by war, Kurt through his life as a soldier in WW2 and American Express through the loss of its primary railroad business during WW1. And now we can add another – they both like things close to the edge.

The American Express Platinum Edge, Amex’s latest credit card offering, has really piqued our interest here at Mozo HQ. Why? Well it’s because Amex have created a credit card that in many respects has reinvented the idea of a platinum card. Where the platinum card has traditionally been positioned as the bastion of the elites, this is a platinum card designed for the masses.

It’s a rewards card which rather than rewarding merely for total spend, instead rewards for spending on regular expenses using what Amex is calling the “3-2-1” system. You get 3 points per dollar spent at all major supermarket chains, which is an outstanding offer, particularly for families racking up big grocery bills every week. On top of that, you also get 2 points per dollar on fuel purchases at all major fuel retailers as well as 1 point per dollar on the rest.

These points are all redeemed through the American Express Ascent rewards program, giving you the choice to redeem with 6 different frequent flyer programs, as well as over 1500 merchandise and gift options from the online store.

On the financial side, the card has a purchase rate of 20.49% which is one of the highest on the market, but you do get 55 days interest free. If you pay your balance off each month there should be no concerns. There is an annual fee (including rewards) of $149 but this is well below the $258 average for Platinum cards. Only catch is you have to meet the minimum income requirement of $50,000.

In terms of extras, the headline grabber is a complimentary return domestic economy flight every year, covering a big chunk of the annual fee cost. It comes with travel insurance as well as a bonus 20,000 points when you sign up, enough for a $200 travel voucher. However, when compared with other American Express platinum cards, there’s been some pruning. There is no concierge, no purchase protection or extended warranty. Consumers will just have to decide whether flights or features are more important to them in a card.

All in all, it’s refreshing to see a credit card provider looking to pitch a platinum card towards the middle end of the market. American Express’ Platinum edge card blurs the lines between a standard and a platinum card well, and its innovative rewards offering may see more consumers joining Kurt out on the edge.

Compare credit cards at mozo.com.au

A couple of months ago we trumpeted St George’s SENSE account as the poster child for the trend towards more different and innovative products in the transaction account category. As a follow up, over the coming weeks I thought it would be good to take a look at a couple of the other new kids on the block who are doing things a bit differently in banking world. The first of these hotshots is ANZ’s Extras Package…

The ANZ Extras Package is a standard ANZ access account which, as the name suggests, comes with a range of extras for an increased monthly fee of $18. What does this $18 get you? Well, apart from a standard day-to-day bank account, the package gives you a range of bonuses and benefits you’d normally associate with a credit card or a home loan package.

The first of these is a slew of instant shopping and dining discounts as well as ticket and travel offers, similar to the kind of thing we’ve seen in credit cards over the past few years. Another key feature is 24 hour roadside assistance. Considering the usual annual cost of this service is approx $99, its addition could help justify forking out the account’s monthly fee.

The Extras Package also comes with mobile phone, domestic travel and accidental death insurance. The mobile phone cover is particularly unique and as it usually costs about $6 a month when taken with your mobile provider, it proves a pretty handy saving. Whilst all this cover is useful, I must say it’s odd that there isn’t some level of purchase protection or extended warranty as they would seem to be a better fit for a day-to-day transaction account.

On the financial side, you get free access to a monthly overdraft facility of up to $1000. You also get 0.2% bonus interest on an ANZ Online Saver account as well as waiver on an ANZ First credit card’s $30 annual fee. Like ANZ’s standard account, the extras package also comes with a Visa debit card.

The question is whether all the ‘extras’ are worth the $18 monthly fee. Financially, the overdraft facility is handy, but there are far better savings and credit card products out there even when you add the discounts into the equation. Also, if you already have a home loan package or credit card, you’ll already have access to most of the benefits available. However, for those without either, ANZ’s extras package has a host of benefits that depending on circumstance, could save you a bit of money and make things a little more convenient. It may not be for everyone, but nonetheless, it’s heartening to see a bank try something new.

Go to mozo to compare all bank accounts

Richard Branson was in Sydney yesterday, bearing the news that Virgin Money is relaunching its consumer banking arm. Earmarked by Branson as “classic Virgin territory” due to the domination of the Big 4 in the marketplace, Virgin Money has declared its intentions, in alliance with Citibank, to make a ‘fair profit’ on the back of “simple and fairly priced products”. The first cabs off the rank in this quest to take on the Big 4 are in the credit card and savings account market.

Virgin Saver
The Virgin Saver is Virgin’s online savings account, a no fees account with a variable introductory rate of 6.75% for 4 months that falls back to 5.35%. These numbers put it right up there with the top 5 standard and promotional savings account rates in the market and it’s a great product, particularly as it lacks the deposit and withdrawal conditions held by some products.

Virgin No Annual Fee Credit Card
The Virgin No Annual Fee Credit Card is Virgin’s ‘no frills’ card. No annual fee and no rewards of any note. It comes with an introductory offer of 2.9% on balance transfers for six months and an ongoing purchase rate of 16.95%. Whilst promoted as “simple and fairly priced”, there are only 44 interest-free days and the card features the sneaky trick we’ve previously highlighted of reverting the balance transfer to the much higher cash advance rate of 20.99% as well.

If you plan on carrying a debt, using our credit card comparison table one can see that there are other low rate and low fee cards that could save you over $500 over 3 years on an average balance of $3000, taking into account the interest and fee costs. However, if you plan on paying off your balance in full each month, this card will cost you nothing, and is well worth picking up for those who enjoy things like the choice of card colour and Virgin’s customer service.

Virgin Flyer Credit Card
The real headline grabber here is the last product on the list, the Virgin Flyer Card, its Platinum frequent flyer card. And it’s a bit of a Jekyll and Hyde proposition.

What Virgin is hoping will sell this product is the flight rewards. The biggest selling point is that four times a year, you’ll get 2 for 1 flights on Virgin Blue. It’s a great feature that’s sure to appeal to many. Factor in the best earn rate for velocity points without getting an Amex, for the first $1,500 monthly spend anyway, and it’s a very good rewards card. Using our credit card Rewards Revealer, at the Australian average spend of $14000, it’s the clear leader once you factor in the free flights. For the high rollers looking for a Platinum Card, those spending $50,000 a year would only derive more value from the Citibank Emirates Platinum card, taking annual fees and free flights into account.

It must be noted however, that as a day-to-day credit card, it’s a pricey option. The rates’ conspicuous absence from Virgin’s release is a signpost to the card’s steep nature. With a rate of 20.99% for both purchases and cash advances and a balance transfer rate of 6.9% for 6 months that reverts to 20.99%, it’s one of the most expensive cards on the market. Throw in the interest free period of only 44 days and you can definitely say it’s not a card to accumulate debt on.

The Verdict
The Virgin Saver looks a winner, particularly given its simplicity. The No Annual Fee card is a good basic card for those who pay off their balance in full each month, but there are better options for those who like to rack up a debt. Again, the Virgin Flyer card also isn’t one for the debt accumulators, however it makes up for it with an excellent flight rewards program. With home loans yesterday stated to be in their sights, it’ll be interesting to see where Virgin goes next.

Compare all savings accounts and rewards credit cards at mozo.com.au

With high competition for customers on both the lending and savings/deposit fronts, it is often the everyday transaction account that gets forgotten by many providers and consumers. Viewed by many as a simple vanilla account, many Australians are oblivious to the fact that there are some great, innovative products out there, all geared to help them save money.

For example, both BankWest and ING Direct offer transaction accounts that reimburse ATM fees. A more innovative product is Suncorp Bank’s everyday options account, which is an everyday account that can link to multiple savings accounts as well as lock away part of your funds to a term deposit “flexiRate”.

St. George’s latest offering, St George SENSE Savings, is similar in many ways to Suncorp’s with a few different bells and whistles. The ‘SENSE’ account is effectively an amalgam of St. George’s leading savings and transactions accounts with a few clever gimmicks to help things along.

The first innovative add on is that you receive a combined statement for both accounts. SENSE also comes with a range of pretty snazzy and informative graphs that help you track your spending. One of them is a pie chart that breaks down your everyday spending by categories, such as leisure, home expenses, and transport. There’s also a bar graph version that shows these amounts month to month. Plus you get a graph outlining your savings progress in relation to your set target.

There’s also the Sense Rounding Contribution graph -and this is what really sets this product apart. What exactly is a rounding contribution? Well, every time you make a purchase on your debit card, the SENSE account automatically rounds up the transaction to the nearest dollar and takes that balance from your everyday account and puts it into your savings bucket. For example, say I bought a coffee and a croissant on my way in to work that costs me $5.30. If I pay using my SENSE account, $6 gets taken out of my account. $5.30 goes to the barista and the remaining $0.70 goes into my SENSE savings account. The same process also applies to all BPay transactions too. It’s a really nifty way to start saving without putting any effort in.

All the standard perks come too – if you deposit over $2000 a month into the account you don’t pay an annual fee, there’s no minimum balance required, a VISA debit card, and all the convenience of having linked accounts, such as ease of transfers and regular payments. The savings account comes with a reasonable 4.85% rate as well.

So hats off to St. George. They’ve managed to craft a simple, yet intuitive and innovative product that redefines the relationship between the transaction and the savings account. For all those that struggle with saving, or simply having to manage two accounts, this is one option that could make a lot of SENSE.

Find the best savings account rates at mozo.com.au.

State against State. Mate against Mate. It’s a line that epitomises rugby league’s annual showcase of interstate rivalry, underscoring the passion and pride on display between the NSW cockroaches and the cane toads from Queensland. With rugby league’s annual State of Origin series now decided, it’s time to bring back the financial biff and pit the states head on!

Since Origin is about representing your state, community and people, we’ve decided to use what consumers have said about their banks hailing from each particular state to create an overall picture. So using the 30,000 bank reviews you’ve submitted, it’s time for Mozo’s annual ‘Rate of Origin’. State against state. Rate against rate.

With 7371 reviews behind them and big players like Westpac, Macquarie and St. George as well as no less than 4 credit unions on our list of the top 10 Australian banks in the side, NSW comes in as strong favourites. As always, Queensland are the underdogs, conceding a significant numerical advantage in both number of reviews (2416) and number of providers (10 to NSW’s 15). They’re led by Queensland stalwarts like Suncorp, Bank of Queensland and their sole representative in our top 10, CUA.

With the NSW camp already shattered and in turmoil after losing their fifth straight origin series, it will come as another body blow to the state and their footballers that NSW is getting dusted not only on the field but also in their wallets. NSW banks put up a solid if unspectacular average overall rating of 6.91, led by strong performances by Teachers Credit Union and the Greater Building Society. However, with old hands Suncorp and Bank of Queensland ably steering them round the park and strong efforts from CUA and Heritage Building Society, the banana benders have stormed home with an overall rating of 7.34 to claim the Origin title.

The real difference between the sides was the abject performance of Westpac, whose rating of 6.7 was the catalyst to NSW’s demise. If you remove Westpac from the equation, NSW’s rating rises to 7.25, a mere drop goal away from victory. NSW will be looking for Westpac to pick up their game over the next year to avoid the pain and humiliation of another Rate of Origin defeat.

So as the dust settles and the xxxx’s are cracked in bank head offices around Brisbane and wider Queensland after another fiery clash between these two interstate rivals, I implore all Origin fans out there to get behind your state and rate your bank to give your state a shot at Origin glory next year!

A slew of Australia’s banks, including the Big 4, are facing, what is being labeled as the largest class action case in corporate history. Litigation funder IMF Australia is funding several class action suits against the banks, seeking at least $400 million of the $5 billion charged in ‘exception fees’ by the banks.

Exception fees are fees charged by banks for ‘exceptional’ circumstances. These circumstances include late payment fees on both credit cards and loans, over-limit fees on credit cards, honour fees when overdrawing a bank account, and dishonour fees charged for cheques that bounce. Reserve Bank data shows that banks charged consumers $961 million in exception fees in 2008.

The impact of these fees on your credit card cost can be significant. Say you’re on a ‘low rate’ credit card with an interest rate of 11.99% and running a $3000 balance. A $30 charge for being a couple of days late on a payment effectively makes your interest rate 12.99% in terms of your cost. If you’re late or overdraw a few more times over the course of the year, the additional costs effectively transforms your low rate card into a middle of the range card without any of the perks.

The principal legal argument for the class action is that when a customer breaks a contract with a bank (by making a late payment for example), the bank may only be able to recover a reasonable estimate of the cost. IMF Australia’s contention is that the banks charge fees much higher than what can be termed a ‘reasonable estimation’, given that it actually costs banks “only a few dollars at most” when you make a late payment or overdraw on your account.

There is a foreign precedent, with close to a million Britons unsuccessfully seeking compensation for overdraft charges in 2009, though a new case set to be heard in Glasgow in June could lead to more litigation. The issue also reared its head in America, with the US Federal Reserve recently ruling that creditors must obtain a consumer’s consent before charging fees for transactions that exceed the credit limit.

Here in Australia, the worst offenders for credit card over limit and late payment fees are Citibank and Suncorp, both charging a whopping $40 for each occurrence. Even NAB, who made a great deal of noise when slashing bank account fees this year, still charge $25 for going over your card limit and $30 for a late payment. Westpac and St. George lead the way, charging only $9. However, the case goes back six years, which could still spell trouble for those who have only recently cut fees.

Even though there will most likely not be a resolution for years, if ever, it will be intriguing to see how the banks behave in the light of all this publicity, particularly in a time of record profits. Even if this case is successful, it almost goes without saying that the banks will find other means to maintain their margins, whether through higher regular account fees or interest rates. As a consumer, the best way to deal with this is to shop around. Only when customers start voting with their feet (and their wallets) will banks really address these issues.

Banking comparsions at mozo.com.au

After much debate and conjecture, the Federal government finally issued what has been widely labeled as a cautious and narrow response relative to the broad and expansive scope of the Henry Review of the taxation system. Indeed, only a smattering of the 138 recommendations outlined in the review have been taken on board for this round of reform. Left off the list were the anticipated new tax concessions on savings. Attention instead turned squarely towards superannuation with Australia’s aging population looming as a big issue.

While a lot of the focus will be on the exclusions, there were some significant steps made towards reform yesterday, the three cornerstones being:
* A 40% tax on mining industry profits, labeled as a resource rent tax on their “super profits” and netting the government $12 billion in forecast revenue between 2012-13.
* Increasing the superannuation guarantee from 9% to 12% by 2020 with the government to contribute $500 for people earning up to $37000.
* A cut in the company tax rate from 30% to 28% by 2015. Small businesses will get the cut by 2013 as well as receiving a range of other new benefits.

The changes announced yesterday have been earmarked as the first step in a wave of changes in enacting revolutionary tax reform. The government has explicitly stated that there will be more announcements in the future on savings incentives, as one of central issues to be addressed in the government’s second term agenda. This still leaves both financial institutions and consumers in the lurch for the foreseeable future however. Many hoped that by increasing bank-held deposits, the saving concessions would help reduce funding costs by alleviating the need to rely so heavily on foreign debt, thereby reducing the need for banks to enact mortgage rate rises above that of the Reserve Bank.

So all up it’s much the same for most of the players in the banking sector, at least for now anyway. All eyes now turn to Martin Place tomorrow, as we see what effect these changes (or lack thereof), will have on the Reserve Bank’s monthly cash rate announcement. Mozo’s rate chasers will be out in force, so be sure to check our Reserve Bank interest rates page from 2:30pm tomorrow to get all the latest news and rate changes as they happen.

Banking comparisons made easy at mozo.com.au

The words ‘tax’ and ‘exciting’ make strange bedfellows at the best of times, but it really can be described as a potentially exciting time for Australians on the tax front. Consumers look set for a double boost this Sunday, when the Federal Government finally releases its findings and decisions derived from the ‘Henry review’ of the tax system. Chaired by the head of the Federal Treasury, Ken Henry, the review has been labeled as a “root-and-branch” review of Australia’s tax system, and by all reports consumers could see gains with regards to both their savings and their mortgages as a result of some of the potentially adopted findings. Dr Henry handed over the report to Treasurer Wayne Swan in December 2009 and since then, Treasury officials have been working on the government’s response to the review.

In terms of Australia’s banking climate, the review looks set to cause a possibly portentous shake-up of the savings account market. Australia is one of the few countries in the developed world to currently tax bank savings at the full rate, a tag which by all reports will be shed soon, with the government preparing to offer significant tax breaks on savings. Whilst the extent of these breaks are as yet unknown, they are unlikely to match the UK model of which where individuals can deposit close to $17,000 (£10,200) tax-free. Dr. Henry is a known admirer of the UK system, yet many in the media are purporting rumours that something similar to the concessions currently in place for superannuation accounts will be announced instead. However, considering the range of options available in terms of size, scope and delivery, there’s no way to be sure till we hear what Wayne Swan has to say himself.

The tax break would also be a huge boost for Australia’s banks as it could generate billions in additional deposits, potentially lowering their funding costs through reducing the reliance on overseas finance. As a result of this, consumers could potentially receive a boost with regards to home loans payments. The banks have been very quick to use high funding costs to justify mortgage rate rises above that of the Reserve Bank‘s cash rate increases. With funding cost pressures alleviated to a significant degree, the government may well turn around and use this savings deposit boost as political leverage aimed at forcing banks to keep mortgage rates down and in turn, voters happy.

Either way, as far as the banking industry is concerned, consumers look to finally be on the receiving end of some good news. Mozo’s Rate Chasers will have a full wrap-up of all the implications for both deposit and lending accounts here on Monday, so be sure to check back to see what all the new changes mean for you.

Compare savings accounts at mozo.com.au