Savings account competition waning, Mozo finds

Consumers looking to compare savings accounts and secure good returns are being presented with fewer competitive options, research by financial comparison service Mozo has found.

Figures supplied by Mozo to the Sydney Morning Herald (SMH) show that ANZ and Qantas Staff Credit Union were the only two institutions to pass on the official 25-basis-point rate rise in November across their standard and promotional savings accounts.

Indeed, Mozo noted that normally competitive online banks like Bankwest, Citibank and UBank had failed to pass on most of the rate increase to savers.

Meanwhile, the SMH reported that from today, Virgin Money – "which previously had the second-highest interest rate offer in the market" – will cut its promotional rate by 24 basis points to 6.51 per cent, lowering the savings account interest rate

"Three of the most competitive online savings brands – Rabodirect, AMP and CUA – have dropped their promotional rates altogether," the paper added.

It was noted that there appears to be a levelling off of competition for savings following a drive by financial institutions to reduce their reliance on wholesale funding last year.

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