Savings rates on the move again

The rebranding of RaboDirect (formerly RaboPlus), with a new advertising campaign and an aggressive 6.4 per cent online savings rate, has been a success, with deposits up 9.8 per cent in May 2010.

The Australian Prudential Regulation Authority's banking statistics for May, released yesterday, show Rabo's household deposits rising from $935 million in April to $1.03 billion last month.

RaboDirect was helped by the fact that other deposit takers took a breather in May, with a number not passing on the 25 basis point increase in the official cash rate at the start of that month. But it was game on again in June.

UBank has regained its position as the price leader in the sector with a series of increases to its USaver account rate over the past month. On June 8 it increased its bonus rate five basis points to 6.26 per cent, on June 24 it raised the bonus rate 16 basis points to 6.42 per cent and yesterday it raised the rate another nine basis points to 6.51 per cent.

While the bonus rate (available to account holders who deposit at least $200 a month) went up a total of 30 basis points in June, the base rate went up only 16 basis points to 6.01 per cent.

UBank also launched a new account yesterday aimed at attracting savers among young adults. USaver Reach is open to customers aged 18 to 29 and pays 6.51 per cent on deposits without the need to make regular deposits. The idea is to help Gen Y slackers start saving, so the offer only applies on accounts with balances below $5000.

According to Mozo and Infochoice data, other deposit takers that have increased their rates in June include ING Direct, which restored its "welcome rate" and now offers 6.25 per cent for four months on new money and a 4.9 per cent base rate.

Bank of Queensland, Bank SA, Citibank, Horizon Credit union, Savings & Loans Credit Union and St George all put up their rates in savings account rates in June.

The highest rate in the market is the UBank Saver bonus rate of 6.51 per cent, followed by RaboDirect with a 6.4 per cent intro rate, and Bank of Queensland, Citibank and ING Direct all offering 6.25 per cent.

BankWest, Hunter United Credit Union, St George and Victoria Teachers Credit Union all have savings rates above six per cent.