High interest online accounts soar in popularity despite falling rates
The number of Australians who hold a high interest savings account or HISA has increased by an estimated 1.5 million people (44 per cent) in the last 5 years according to the latest Roy Morgan Research.
Norman Morris of Roy Morgan said that the increase in popularity of HISAs is not surprising as Australians adapt to changes in the market especially with the rise in online banking.
"HISAs provide customers with ready access to their money, a competitive interest rate and a government guarantee," he said.
According to the research, the CBA Group, which includes Bankwest) had the highest growth in customers (over 500,000), followed by NAB Group (450,000 customers) ANZ Group (390,000) and Westpac Group at 330,000 customers.
Of the non-majors ING has seen the largest growth by an estimated 63,000 accounts, followed by CUA group (57,000) and Citibank (38,000).
Despite the increase in popularity of HISA accounts, interest rates of those accounts have dropped dramatically over the past few years as the RBA cash rate has fallen. According to the Mozo database, three years ago savers could get bonus savings rates as high as 6.51% with UBank and Virgin Money compared with 4.62% today. Today the highest standard ongoing rate is 3.75% (Virgin Money Virgin Saver) compared with 6.01% from UBank's USaver account 3 years ago.