The rise of the online savings account has been the biggest development in the savings account market over the last few years.
Characterised by a higher interest rate, low (if any) fees, set incentives and linked access to a designated transaction account, online savings accounts have quickly become the norm as the technology wave continues to push consumers’ financial management out of the bank branches and on to their desktops.
In what is a new and potentially revolutionary take on the online savings account model, UBank, NAB’s online offshoot, has launched the ‘USaver‘ account. Well, firstly it’s a market leading interest rate of 5.11% (and if you set up an automatic savings plan it goes up another 0.1%). Whereas similar online savings accounts have high introductory interest rates that last for a few months then go down to a reduced base rate, the USaver account is set to one variable rate for life. For example, say you had the Westpac equivalent, the ‘eSaver‘ account – you’d get a special introductory rate (currently 4.3%) for 4 months then it would revert back to a base rate of 2.75% for the life of the account. Not only is the bonus rate lower than UBank’s standard rate, the base rate is less than half!
Interest rates aside, the USaver is packed with handy features. Unlike many online savings accounts, there’s no need to have a linked bank account. You can transfer your money to any other Australian bank account at any time without being charged fees or getting your interest rate penalised. Moreover, you can set up multiple accounts for each savings goal within the one account. For example, set up one account for travel savings, one for a new car, etc. Each USaver account also comes with a nifty savings tracker, which based on your interest rate and account balance can calculate the time/money required to reach your goals and display it in a snazzy graph.
What’s the catch? Well it’s a variable rate. Where other online savings accounts give you the security of knowing that you’ll at least be getting your 3%, UBank can adjust the rates as they see fit. That being said, as soon as the rates hit a low level it’s not hard to transfer your money across to that old savings account. The other main gripe I can distinguish is the lack of a linked transaction account. With most online savings accounts, you can instantly transfer your savings to your transaction account as they are with the same bank. With the USaver, you’d have to wait a day or two in processing for your savings to get across – though arguably it’s almost another tool to stop you throwing your money away on that extra round of drinks at 1am!
So all up, I’d have to say that UBank really have put out a cracker of a product. A couple of drawbacks aside, it succeeds where it matters – it’s simple to use and apply for, has a fantastic interest rate and some great innovative features. Ubeauty!
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