Neobanks 86 400 and Up top charts amid savings rates crash

In the past year we’ve watched the savings account landscape change dramatically as rates have shifted from a state of flatlining to the total free fall which we’ve witnessed over the past five months. 

Of course there’s no great mystery behind this shift. 

For (roughly) three years between August 2016 and June 2019 ongoing savings account rates were flat as a pancake - a period which coincided with a pause between Reserve Bank (RBA) interest rate movements. 

Since June 2019, when the RBA made its first cut of the year, these rates have been tumbling though.

To put it in perspective, the average ongoing savings account rate in the Mozo database in November 2018 was 1.52%, whereas it now sits at just 0.99% - a 0.53% drop in just a year. 

“Banks have not been shy about passing the 2019 RBA cuts on to their savings account customers as they attempt to maintain a balance between home loan rates on the one hand and deposit account rates on the other,” said Mozo Banking Expert, Peter Marshall. 

“Unfortunately for savers this means that they’re now receiving a much lower rate of return on savings accounts and term deposits than they’ve been used to in recent years.” 

Neobanks mounting a challenge  

Over the past year we’ve also witnessed the emergence of Australia’s newest banking players: the app-based ‘neobanks’ or ‘digital banks’. 

In October 2018, Up became Australia’s first neobank to launch to the public, followed by 86 400 in September 2019 and these two will likely be joined by the likes of Volt Bank and Xinja in the very near future. 

So what do savings account rates and neobanks have in common?

Well as of the time of writing, 86 400 and Up share the title of having the highest ongoing savings rates in the Mozo database at 2.25%.

Maximum RateConditions
86 400 - Save Account2.25% (balances up to $100,000)Deposit $1,000+ each month
Up - Saver Account2.25% (balances up to $50,000)5 card purchases per month using linked debit card
BOQ - Fast Track Saver2.15% (balances up to $250,000)$1,000+ into linked Day2Day Plus Account per month
UBank - USaver with Ultra Transaction Account2.10% (balances up to $200,000)Deposit $200+ into either account per month

And according to CEO Robert Bell, 86 400’s digital platform is a real advantage when it comes to being able to offer users a competitive savings rate. 

“86 400 operates without the expensive overheads of traditional banks like physical branches or legacy systems,” he said.  

“By operating as a digital-first smartbank with a technology and automation embedded throughout our business, we’re able to pass on these savings to our customers and help them take better control of their finances.”

To put the 2.25% maximum rate offered by 86 400, and Up into perspective, only 12 banks in the Mozo database currently offer an ongoing savings account interest rate of 2.00% or higher. 

It also sits well above the rates being offered by the big four banks. 

With a maximum rate of 1.65%, the Westpac Life Account is the highest on offer among the majors, followed by NAB’s Reward Saver at 1.61% and ANZ’s Progress Saver at 1.60%. 

The Commonwealth Bank’s GoalSaver sits even further below the rest of the pack at just 0.90%.

Is saving about more than just a rate? 

Despite the fact that his own bank is offering one of the highest rates around, Bell still makes the argument that savers need to do more than focus on interest rates alone - especially in a low rate environment. 

“Given the current state of play of Australian rates, comparing accounts simply on rates doesn’t give consumers the full picture. Consumers should also be comparing the requirements needed to achieve the best rates.”

Unlike introductory rates (which only last for a set time period) and base rates (which are no strings attached), savings accounts with ongoing bonus rates require savers to meet minimum criteria each month. 

For example, 86 400 require savers to deposit at least $1,000 a month into a Save or Pay account while fellow neobank Up has a minimum requirement of at least five card purchases each month using their Everyday Account.

And unlike many ongoing bonus rate savings accounts, neither 86 400 or Up restrict savings account withdrawals during the month.

                   Image: 86 400 CEO Robert Bell

Bell also urged Australians to be proactive about increasing their savings by shedding unnecessary expenses - for instance, subscription services.

“One of the biggest expenses Australians face is paying for subscription services they don’t use and forgetting to pay their direct debits on time due to our increasingly complex financial lives,” he said. 

“Recent research conducted by YouGov found that Australians are wasting $2.7 billion every year on unused subscriptions – or almost $500 per person – and are being charged nearly $1 billion in late fees over the same period.” 

“These are really simple habits to fix, with the right tools, and can save considerable amounts of money.” 

One way neobanks like 86 400 are aiming to target Australian savers is by providing the “smart technology” to allow their customers to better track saving, spending and payments - all from an app. 

“The 86 400 app tracks customer savings and spending across all their financial accounts (from over 150 different financial institutions), including credit cards,” said Bell.

“It also clearly displays money coming in versus money going out each month from their 86 400 account and it provides customers with simple actions they can take to better manage their money, such as providing nudges about upcoming bills, subscriptions and direct debits.”

RELATED: 86 400 out of the blocks as first Australian neobank to offer home loans

Interested in learning more about neobanks? Take a crash course with our digital banking and neobanks guide, or start comparing a range of savings accounts by heading over to the Mozo savings account comparison tables. 

Compare savings accounts - rates updated daily

Search promoted savings accounts below or do a full Mozo database search. Advertiser disclosure.
  • placeholder
    Boost Saver with Go Account

    Maximum rate
    standard interest rate
    Govt Deposit Guarantee
    1.20% p.a. (for $0 to $250,000)
    0.10% p.a.(for $0 and over)
    Yes up to $250,000

    Deposit $2,000 each month and make 5 eligible payments from your Go Account. If you are between 18 and 25 deposit $1,000.

    Enjoy a savings account bundled with a spending account. New customers can earn up to 5000 bonus Virgin Money points on purchases (conditions apply). Benefit together with a joint account

    Go to site
    Details
  • placeholder
    Mozo Experts Choice 2021
    Bonus Saver Account

    Maximum rate
    standard interest rate
    Govt Deposit Guarantee
    1.20% p.a. (for $0 to $250,000)
    0.10% p.a.(for $0 and over)
    Yes up to $250,000

    Bonus rate when at least $20 is deposited each month and five Visa Debit transactions are made each month using linked Everyday or Glide transaction accounts.

    Winner of a Mozo Experts Choice Award 2021 in the Regular Saver category. No monthly account fees and no minimum balance requirements.

    Go to site
    Details
  • placeholder
    Grow Saver

    Maximum rate
    standard interest rate
    Govt Deposit Guarantee
    0.65% p.a. (for $0 and over)
    0.10% p.a.(for $0 and over)
    Yes up to $250,000

    Make at least 1 deposit and no more than 1 withdrawal, including internal transfers or external payments.

    Earn a maximum interest rate of 0.65% per year. Pay no monthly fees. Set up in-app savings goals. Benefit with joint account options.

    Go to site
    Details
  • placeholder
    Serious Saver

    Maximum rate
    standard interest rate
    Govt Deposit Guarantee
    0.30% p.a. (for $0 to $1,000,000)
    0.15% p.a.(for $0 and over)
    Yes up to $250,000

    Bonus rate for first 3 months, reverting to 0.15% rate after

    $0 monthly account fee. Link to any Australian bank account.

    Go to site
    Details
  • placeholder
    Hero Saver

    Maximum rate
    standard interest rate
    Govt Deposit Guarantee
    0.70% p.a. (for $0 to $250,001)
    0.01% p.a.(for $0 to $5,000,000)
    Yes up to $250,000

    Minimum deposit of $200 and no withdrawals in the month.

    Interest is calculated daily and paid monthly. Automatic payment feature. No minimum opening balance needed.

    Go to site
    Details

^See information about the Mozo Experts Choice Savings Accounts Awards

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