Virgin Saver prompts response

With the official cash rate sitting at 4.5 per cent since May, pricing committees in retail banks have been able to take a breather. But one area where there is still plenty of action is in the online savings account market.

The entry of Virgin Money into the high yield, at call deposit market at the end of July with a market leading rate has prompted some re-pricing among competitors.

Virgin is offering a four-month introductory rate of 6.75 per cent on Virgin Saver and a base rate of 5.35 per cent. Over the past couple of weeks Citibank, CUA and Hunter United have put up their rates.

Citibank (which is Virgin's banking partner) has increased the six-month introductory rate on Citibank Online Saver from 6.25 to 6.35 per cent. The base rate remains unchanged at 5.25 per cent.

CUA has introduced a four-month introductory rate of 6.3 per cent on its eSaver account. The base rate is 4.9 per cent.

Hunter United increased the standard rate on its Premium Online Saver Account from 6.15 to 6.37 per cent. The minimum deposit is $5000.

The most recent Australian Prudential Regulation Authority data on household deposits shows how price sensitive the retail market is. The rebranding of RaboDirect, with a new advertising campaign and a 6.4 per cent introductory rate boosted deposits by 9.8 per cent in May and 27 per cent in June.