Saving intro rates go up faster than base rates

The price leader in the online savings account market, UBank, put up the rate on its USaver account four times between late May and early July – a total move of 30 basis points on its bonus rate – to 6.51 per cent. The USaver base rate moved too, but not as much. It went up a total of 16 basis points over the same period to 6.01 per cent.

UBank’s rate setting is indicative of a trend in the online savings account market, where loyalty, bonus, introductory or “welcome” rates are moving ahead faster than base rates.

Citibank put its six-month introductory rate up from 6.25 to 6.35 early in June but left the base rate unchanged at 5.25 per cent. ING Direct reintroduced an introductory rate of 6.25 per cent on Savings Maximiser, after having not offered one for a few months, but has left its 4.9 per cent base rate unchanged for the past few months.

There are wide gaps between introductory or bonus rates and base rates – 140 basis points in RaboDirect’s case, 155 basis points for St George Direct Saver, 215 basis points for Bank of Queensland.

Source: Banking Day