Up has become the latest neobank to take the axe to its savings offer following the Reserve Bank's most recent cut to official interest rates.
Today, the Melbourne-based digital bank brought the maximum rate on its Saver Account down by 15 basis points to 1.85%. To hit this rate, savers will still be required to make five monthly transactions from a linked Up Everyday Account.
This move follows a larger 25 basis point cut earlier last month, which saw Up’s maximum rate available on balances of up to $50,000 fall from 2.25% to 2.00%.
And Up isn’t alone, with other neobanks like Volt Bank and 86 400 also responding to the two RBA cuts in March with slashes to their ongoing savings rates.
Meanwhile, Xinja had to temporarily pull its Stash account from the market in order to keep its rate at 2.25% for existing customers.
The dire state of savings rates
According to Mozo’s March Banking Roundup, neobanks aren’t the only ones to experience this downward trend. Unfortunately for savers, at-call deposit rates in general have continued to plummet over the past month, with little sign of relief.
In March, the average ongoing rate for all savings accounts in the Mozo database dropped by 13 basis points, now sitting at a paltry 0.84%.
And just today, AMP’s introductory rate on its Saver Account also fell by 39 basis points to 2.26%. This change partly backtracks on the bank’s recent decision to boost its maximum savings rate by a massive 54 basis points.
“We’re in a very low interest rate environment and I expect that to continue for years. So lenders are not going to be able to charge higher rates for home loans for a long time, which means they can’t offer much to depositors,” Mozo’s Banking Expert, Peter Marshall said.
RELATED ARTICLE: Savings account snapshot: All the recent rate changes you’ll want to know about
How to supersize your savings stash
While Up’s maximum rate has fallen below 2.00%, three providers in the Mozo database (84 600, Bank of Queensland*, MyState Bank) still offer this ongoing rate, given that you meet certain conditions each month.
But what if you’re aiming even higher than 2.00%? Well, you’re in luck! For savers willing to go the extra mile for a more competitive deal, there’s another type of savings account worth keeping on your radar: those with introductory rates of as high as 2.65%.
There's just one catch: these killer rates only last for a limited period of time after you sign up, so you’ll need to be proactive with switching between different savings accounts in order to keep earning superb interest on your nest egg.
That said, if you don’t mind keeping your eye on the market and moving your cash stash every four to six months, here’s a few hot offers up for grabs: