Neobank savings rates take a dive, no longer most competitive
If you’re an avid saver, then we don’t have to tell you that a year ago neobanks were your best bet for a decent return on your savings.
However, recent Mozo analysis has shown that three neobanks have been forced to follow in the footsteps of the big four banks and slash their savings accounts rates.
Over the last month, Mozo found that Up made the biggest reduction by shaving 25 basis points off its Saver Account (1.65%), meanwhile Xinja and 86 400 both cut 15 basis points off their savings products, bringing the rates down to 1.65% and 1.70%, respectively.
“While the neobanks had managed to offer a glimmer of hope for the nation’s savers, these out of cycle cuts are a worrying sign,” said Mozo Director, Kirsty Lamont.
“As they seek to attract new customers, we’ve come to expect the neobanks will buck the downward trend of the banks but with their savings rates also heading south they appear to be rejoining the pack.”
According to the Mozo database, Australian Unity and MyState Bank currently offer the leading at-call savings rate of 1.75%, while the big banks severely lag behind with an average on-going savings rate of 0.54%, 121 basis points difference.
Though there was some good news for younger Aussies looking to boost their savings balance, as Westpac launched its new Westpac Life account, boasting an impressive 3.00% for balances up to $30,000.
Term deposits take a tumble
Sadly, the results weren’t all that different for term deposits either, with 70 of the 86 accounts in the Mozo database all having their rates cut in the past month.
“Unfortunately there is not a lot of good news around if you’re trying to get a decent return on your savings but with a significant gap between the highest and lowest rates in the market, it still pays to compare,” said Lamont.
Mozo found that the top one-year term deposit is Judo Bank at 1.40%, which is also significantly higher than the best big bank one-year rate of 0.85%, belonging to NAB.
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