NAB adds to savings account woes while neobanks hit their stride
Thursday 16 January 2020
In a surprise move announced yesterday and implemented today, NAB has reduced interest rates on two popular savings accounts by up to 0.15%
Today’s cuts were the fifth time the major bank has reduced interest rates on both savings accounts in the past year, with Mozo Banking Expert, Peter Marshall, surprised by NAB’s decision.
“It’s unusual for a change to be coming through right at the moment. It's been a long time since the last RBA rate cut and while there could be another in a couple of weeks when we get to the February meeting, that’s far from a certainty,” he said.
“So why they’d be chopping any key savings rates right now is very surprising.”
In comparison to the ongoing savings account rates offered by the rest of the Big Four, the NAB Rewards Saver account is now the third highest, sitting behind Westpac’s Life account (1.65%) and ANZ’s Progress Saver account (1.60%), but well ahead of the Commonwealth Bank’s Goal Saver (0.90%).
For perspective, the average ongoing savings account rate in the Mozo database which includes both ongoing account rates with (e.g. minimum deposits) and without conditions currently sits at just 0.98%.
Neobanks take poll position
While NAB were preparing to drop savings rates yesterday, one of the newest banking players in Australia were in the process of launching a brand new savings account with one of the highest interest rates currently on the market.
Offering an ongoing rate of 2.25% for balances up to $245,000, the Stash savings account from neobank Xinja immediately claimed the position of equal-highest ongoing interest rate in the Mozo database.
As the table below shows, Xinja’s new account shares that position with two other neobanks: the Up Saver Account (2.25% for balances up to $50,00) and the 86 400 Save Account (2.25% for balances up to $100,000).
Highest ongoing savings account rates in the Mozo database (16/01/2020)
|Xinja - Stash||2.25% (Up to $245k)||No|
|86 400 - Save Account||2.25% (Up to $100k)||Yes|
|Up - Saver Account||2.25% (Up to $50k)||Yes|
|Volt - Savings Account||2.15% (Up to $245k)||No|
|BOQ - Fast Track Saver||2.15% (Up to $250k)||Yes|
However, unlike the accounts from Up and 86 400, the Xinja Stash account has no minimum requirements for savers to meet.
In that respect, along with the rate on offer, Xinja’s offer is similar to the account revealed by neobank Volt Bank last month. Once it fully launches in February, the Volt Savings Account will feature a 2.15% with no strings attached.
As Marshall explains, a savers ability to meet any rate requirements attached to their account can potentially have a sizeable impact on the interest rate they’re getting.
“For a while now banks have been offering ongoing bonus rates as their prime rates to reward people for doing things like depositing their salary or using their bank account regularly - really as a way to build that relationship,” he said.
“It’s a bit of a carrot and stick relationship where the carrot’s a great rate, but the stick, which is easy to lose sight of, is that if you fail to meet those conditions then you get hit with an extremely low rate.”
“That’s why it’s really great to see some of the newer players coming into the market without those kinds of arrangement and really just saying to savers that if you put your money with us, you're going to get that great rate month in, month out.”
Ready to ditch your current savings account in favour of something more rewarding? Start your search by checking out some of the hot offers below, or take a trip to our handy savings account comparison tables for an even wider range of offers.
*Check out the linked reviews for full information about any conditions required to meet the maximum interest rate on offer.