The 12th Annual Choice Shonky Awards were held today, naming and shaming the biggest lemons from 2017. Among the “winners” was big bank Westpac, for it’s much-hyped Bump Account.
Citing a below average interest rate, a list of conditions to snag bonus interest and the “creepiness” of signing an unborn baby up to a bank, Choice awarded Westpac a Shonky “for this downright creepy, poor-value bank account.”
Back in January, Mozo crunched the numbers on the Bump Account, and found that with $20 weekly deposits over 16 years, the 1.50% interest rate originally advertised with the account could leave savers out of pocket by over $3,000 when compared to other leading accounts.
Taking into account the bonus rate of 2.30% available when you make a monthly deposit and keep the account balance higher at the end of the month than at the beginning, Choice calculated that with a $200 per month deposit, 16 years would leave a tiny saver with a balance of $46,654.
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While that’s better than the conservative $19,054 originally advertised by Westpac, snagging a higher interest rate can mean a plumper balance in the long run - even if it doesn’t come with a $200 bonus.
For example, the highest ongoing bonus rate in Mozo’s database (excluding introductory offers) at the moment is 3.00%. With a starting balance of $0 and $200 deposits each month, one of the accounts offering this rate could bag savers a total balance of $49,209 over 16 years.
“This just goes to show how careful you need to be about not getting drawn in by promotions and bonuses, without considering the long term value of a financial products,” said Mozo Director Kirsty Lamont.
“When choosing a savings account to set up a nest egg for your child, it’s well worth your time to compare your options and make sure you’re getting the best deal. And interest rates are changing all the time, so you really should also be reviewing it every few years in case a better offer crops up.”