Ubank has announced it will introduce tiered interest rates and will no longer allow external payments from its Save accounts from 1 July.

The NAB-owned digital bank has outlined the parameters of the new tiers - deposits of $0-$100,000; $100,000-$250,000; and more than $250,000 - but not the interest rates that will be attached to them.

Interest will be paid on the savings within each tier, meaning depositors might find different interest rates apply to different portions of their savings.

Currently, ubank offers a 5.10% p.a. variable interest rate on its Save accounts on amounts up to $250,000.

Ubank puts an end to direct transfers from savings accounts

Ubank advised customers they soon won't be able to make direct debits, PayTo, BPay, and BSB and account payments from their Save accounts and will need to set up separate Spend or Bills accounts.

It will still allow ubank home loan repayments to be made from Save accounts.

At the same time, the monthly deposit requirement to qualify for bonus interest will jump from $200 to $500, with customers also required to have a ubank Spend account.

The $500 deposit must come from an external account, as internal transfers between ubank accounts won't qualify.

In NAB's half-yearly results, announced last month, the big bank touted ongoing customer acquisition in ubank's target segment of under 35-year-olds.

The figures credit ubank for growth in on-demand deposits of $1.7 billion in the 12 months to March 2024, but there has already been some customer backlash.

Customers left discontented

The changes have incensed many ubank savers on Reddit's AusFinance forum.

Most were annoyed that ubank has announced it will move to a tiered system without revealing the accompanying interest rates.

Many were also unhappy that external transfers from ubank Save accounts would come to an end, as the feature saved them from setting up separate transaction accounts.

Much of the general advice shared on the forum suggested disgruntled ubank savers move their deposits to a savings account from Macquarie or ANZ Plus, both of which offer competitive interest rates with limited conditions.

However, ANZ is now advising ANZ Save customers the 4.90% p.a. interest rate offered on balances of less than $250,000 may be affected by "additional criteria" that will apply from 1 September 2024.

There are no further details on the changes at this stage.

Other Reddit users noted ING employed the same tightening tactics, adding additional requirements to its competitive savings account offerings after making a splash on the market when it launched more than 20 years ago.

Ubank responds

But ubank said the upcoming changes to its Save accounts are part of ongoing efforts to help customers "see their money clearly".

"We are introducing new bonus interest tiers and bonus rate criteria, along with changing some functions of our ‘Save’ accounts," a ubank spokesperson said.

"This is to help customers keep ‘Save’ for saving money and use their Spend and Bills’ accounts for everyday spending, bills, and expenses."

In February, ubank announced it would be progressively rolling out new budgeting and bills features on its app, in conjunction with a new Bills account, designed to provide a separate space for setting aside bill payments.

"We'll share more information with customers on our bonus interest tiers and those who are still using their Save account to make payments, we’ll help get them ready for the changes ahead," the ubank spokesperson said.

More new loopholes for savings accounts

But the changes are being seen as putting up further barriers to accessing high interest savings accounts with few strings attached across the market.

On 1 June, Bank Australia announced changes to its Bonus Saver account, significantly cutting its interest rate offerings for deposits of over $250,000.

The bank that touts itself as for "people who believe in a fair and just society" slashed the interest rate offered on balances of $250,000 to $500,000 by 35 basis points and on amounts over $500,000 by 55 basis points.

Its new tiered interest rates are as follows:

Balance Interest (p.a.)
$0-$100,000 5.25%
$100,000.01 - $250,000 4.75%
$250,000.01 - $500,000 4.30%
$500,000.01 + 4.00%

To get those rates, customers must make a deposit of at least $100 and no withdrawals each month.


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Important Information and Comparison Rate Warning

All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of June 19, 2024. View disclaimer.

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