Savings leaders baulk at latest rate rise

The Reserve Bank's increase in the official cash rate earlier this month has proved too big a hurdle for some of the price leaders in the online savings account market.

Groups including UBank, ING Direct, RaboPlus, BankWest and Citibank, that have all been aggressive price leaders in the segment, have left their rates unchanged since the RBA's April 6 announcement of another 25 basis point increase in the cash rate or have passed only part of the increase.

As reported in Banking Day last week, UBank has left its rate unchanged. The NAB online offshoot offers a base rate of 5.85 per cent and a bonus rate of 10 basis points for account holders who make regular minimum deposits.

RaboPlus, which offers 5.75 per cent to account holders who increase their balance by $200 a month, has also left its rate unchanged.

All groups responded to inquiries by saying that their rates were already above the market. Hot deals on online savings accounts may be coming to an end but there are still some attractive at-call rates on offer.

Citibank increased the base rate on its Online Savings account from 4.5 to 4.75 per cent but increased the six-month introductory rate by only 13 basis points - from 5.88 to 6.01 per cent.
 
ING Direct increased the four-month introductory rate on Savings Maximiser by 15 basis points from 5.85 to six per cent.

BankWest increased the base rate on TeleNet Saver from four to 4.25 per cent but has not changed the 12-month introductory rate of 5.75 per cent.

All big four banks put their online savings account rates up 25 basis points. ANZ Online Saver is paying 4.5 per cent, Commonwealth Bank NetBank Saver 5.75 per cent, NAB iSaver 5.75 per cent and Westpac eSaver 5.75 per cent.

Most of the institutions with competitive offers in this market are relying on introductory or bonus rates to get ahead of the pack. The groups with the highest base rates are UBank, at 5.85 per cent, ME Bank (5.35 per cent), Arab Bank (5.3 per cent) and Rural Bank (5.1 per cent).