Photo source: Adobe
Photo source: Adobe
Another savings account immortalised by the Barefoot Investor, UBank’s USaver with Ultra account, has had its interest rate cut following the reduction to the cash rate earlier in June.
Previously boasting one of the five highest savings account rates on the market at 2.87%, UBank has cut interest rates for savers by 27 basis points, taking the maximum interest rate on the ‘USaver with Ultra’ account to 2.60% p.a.
The National Australia Bank-owned institution lowered the base rate on its ‘USaver’ and ‘USaver with Ultra’ accounts from 1.81% p.a. to 1.54% p.a.
This is a larger rate cut than the 25 basis points passed on to UBank’s variable home loan customers, which became effective today.
The bonus interest rate on the ‘USaver with Ultra’ account remains unchanged at 1.06% – to earn this extra rate, customers need to hold a linked ‘Ultra’ transaction account and deposit at least $200 a month (e.g. their salary) into either the transaction account or savings account.
UBank follows other banks cutting savings account rates over the past few weeks, including ING, which lowered the total interest rate on its popular ING Savings Maximiser product by 25 basis points to 2.55%.
Each of the big four have also reduced savings account rates by 20-25 basis points.
A number of UBank customers have taken to Twitter and Reddit to complain that UBank did not adequately inform them about the changes, which were effective yesterday.
However, UBank did make an announcement of the changes in the notices section of The Australian (print version only).
Not happy @UBank! Every other bank discloses ahead of time that savings interest rates are changing, but you. Why? Woke up this morning to see the savings rate had dropped by 0.27% this morning; no email or notice on your website; is a digital first bank now using snail mail?— Charlie (@FetchAcorn) June 27, 2019
C'mon who reads the Australian? Obviously emailing your customers is a more effective way to notify people. But you already know that. You hope people don't notice & therefore don't leave. Shrewd.— sarahhashtag (@sarahhashtag) June 27, 2019
In a statement, a company spokesperson said UBank is proud to still offer some of the most competitive rates in the market.
“Despite this change, our savings account and term deposit offering remains highly competitive and we encourage our customers to get in touch with us to discuss their needs,” the spokesperson said.
“Our recent decrease to our home loan variable rate by 25 basis points is also effective, June 28.”
How much of a difference does 27 basis points make?
On a starting balance of $10,000, with monthly deposits of $1,000, the former rate of 2.87% would have earned UBank customers approximately $450 in interest over one year.
But at the reduced interest rate of 2.60%, this interest figure is closer to $400.
High-interest savings account rates
*Data accurate as at 21 September 2020. Rates based on a savings balance of $10,000. Introductory bonus interest rate products not included. Sorted by total interest rates. Refer to providers' websites for bonus rate conditions.
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