Virgin Saver
The Virgin Saver is Virgin’s online savings account, a no fees account with a variable introductory rate of 6.75% for 4 months that falls back to 5.35%. These numbers put it right up there with the top 5 standard and promotional savings account rates in the market and it’s a great product, particularly as it lacks the deposit and withdrawal conditions held by some products.

Virgin No Annual Fee Credit Card
The Virgin No Annual Fee Credit Card is Virgin’s ‘no frills’ card. No annual fee and no rewards of any note. It comes with an introductory offer of 2.9% on balance transfers for six months and an ongoing purchase rate of 16.95%. Whilst promoted as “simple and fairly priced”, there are only 44 interest-free days and the card features the sneaky trick we’ve previously highlighted of reverting the balance transfer to the much higher cash advance rate of 20.99% as well.

If you plan on carrying a debt, using our credit card comparison table one can see that there are other low rate and low fee cards that could save you over $500 over 3 years on an average balance of $3000, taking into account the interest and fee costs. However, if you plan on paying off your balance in full each month, this card will cost you nothing, and is well worth picking up for those who enjoy things like the choice of card colour and Virgin’s customer service.

Virgin Flyer Credit Card
The real headline grabber here is the last product on the list, the Virgin Flyer Card, its Platinum frequent flyer card. And it’s a bit of a Jekyll and Hyde proposition.

What Virgin is hoping will sell this product is the flight rewards. The biggest selling point is that four times a year, you’ll get 2 for 1 flights on Virgin Blue. It’s a great feature that’s sure to appeal to many. Factor in the best earn rate for velocity points without getting an Amex, for the first $1,500 monthly spend anyway, and it’s a very good rewards card. Using our credit card Rewards Revealer, at the Australian average spend of $14000, it’s the clear leader once you factor in the free flights. For the high rollers looking for a Platinum Card, those spending $50,000 a year would only derive more value from the Citibank Emirates Platinum card, taking annual fees and free flights into account.

It must be noted however, that as a day-to-day credit card, it’s a pricey option. The rates’ conspicuous absence from Virgin’s release is a signpost to the card’s steep nature. With a rate of 20.99% for both purchases and cash advances and a balance transfer rate of 6.9% for 6 months that reverts to 20.99%, it’s one of the most expensive cards on the market. Throw in the interest free period of only 44 days and you can definitely say it’s not a card to accumulate debt on.

The Verdict
The Virgin Saver looks a winner, particularly given its simplicity. The No Annual Fee card is a good basic card for those who pay off their balance in full each month, but there are better options for those who like to rack up a debt. Again, the Virgin Flyer card also isn’t one for the debt accumulators, however it makes up for it with an excellent flight rewards program. With home loans yesterday stated to be in their sights, it’ll be interesting to see where Virgin goes next.

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For example, both BankWest and ING Direct offer transaction accounts that reimburse ATM fees. A more innovative product is Suncorp Bank’s everyday options account, which is an everyday account that can link to multiple savings accounts as well as lock away part of your funds to a term deposit “flexiRate”.

St. George’s latest offering, St George SENSE Savings, is similar in many ways to Suncorp’s with a few different bells and whistles. The ‘SENSE’ account is effectively an amalgam of St. George’s leading savings and transactions accounts with a few clever gimmicks to help things along.

The first innovative add on is that you receive a combined statement for both accounts. SENSE also comes with a range of pretty snazzy and informative graphs that help you track your spending. One of them is a pie chart that breaks down your everyday spending by categories, such as leisure, home expenses, and transport. There’s also a bar graph version that shows these amounts month to month. Plus you get a graph outlining your savings progress in relation to your set target.

There’s also the Sense Rounding Contribution graph -and this is what really sets this product apart. What exactly is a rounding contribution? Well, every time you make a purchase on your debit card, the SENSE account automatically rounds up the transaction to the nearest dollar and takes that balance from your everyday account and puts it into your savings bucket. For example, say I bought a coffee and a croissant on my way in to work that costs me $5.30. If I pay using my SENSE account, $6 gets taken out of my account. $5.30 goes to the barista and the remaining $0.70 goes into my SENSE savings account. The same process also applies to all BPay transactions too. It’s a really nifty way to start saving without putting any effort in.

All the standard perks come too – if you deposit over $2000 a month into the account you don’t pay an annual fee, there’s no minimum balance required, a VISA debit card, and all the convenience of having linked accounts, such as ease of transfers and regular payments. The savings account comes with a reasonable 4.85% rate as well.

So hats off to St. George. They’ve managed to craft a simple, yet intuitive and innovative product that redefines the relationship between the transaction and the savings account. For all those that struggle with saving, or simply having to manage two accounts, this is one option that could make a lot of SENSE.

Find the best savings account rates at mozo.com.au.

This is a big win for the banking industry. The measure only applies to income earned on bank accounts, savings accounts, term deposits, bonds and annuities. It will have the effect of pulling money into the banks from other investment vehicles — and from out of cookie jars and under mattresses. And it is Mr Swan’s hope – and mine, and I’m sure yours – that this extra leg up for banks will help them gather sufficient deposits to reduce the overall cost of funding their home loan products. Wouldn’t that be nice: better savings returns and cheaper home financing. Only time will tell.

But what’s it mean for you exactly? Well, at an interest rate of 5.85% (the best standard at-call interest rate in the market right now, at UBank), you’ll be able to save up to $17,000 and receive the full rate reduction. If your taxable income is between $35,000 and $80,000 then you’ll only pay an effective tax rate of 15% on interest: that means a saving of up to $150 a year. And of course the savings are even higher if you’re on a higher rate of tax.

But here’s a savings measure you can access right now. If you already have money that’s not getting the best rate in the market, you can make $150 or more by moving it. If your 17 grand is only earning 4.50%, say in an old BankWest TeleNet Saver account, then moving it to a rate of 5.85% makes you $150 — even after paying current tax rates. And you can do better yet with a Term Deposit, where plenty of providers offer well over 6% on your money for terms as short as 6 months.

If you’re not making the most of your savings, don’t wait for 2011. Mozo’s Rate Chasers have been out in the field chasing down the best rates – compare savings account and term deposit rates now.

While a lot of the focus will be on the exclusions, there were some significant steps made towards reform yesterday, the three cornerstones being:
* A 40% tax on mining industry profits, labeled as a resource rent tax on their “super profits” and netting the government $12 billion in forecast revenue between 2012-13.
* Increasing the superannuation guarantee from 9% to 12% by 2020 with the government to contribute $500 for people earning up to $37000.
* A cut in the company tax rate from 30% to 28% by 2015. Small businesses will get the cut by 2013 as well as receiving a range of other new benefits.

The changes announced yesterday have been earmarked as the first step in a wave of changes in enacting revolutionary tax reform. The government has explicitly stated that there will be more announcements in the future on savings incentives, as one of central issues to be addressed in the government’s second term agenda. This still leaves both financial institutions and consumers in the lurch for the foreseeable future however. Many hoped that by increasing bank-held deposits, the saving concessions would help reduce funding costs by alleviating the need to rely so heavily on foreign debt, thereby reducing the need for banks to enact mortgage rate rises above that of the Reserve Bank.

So all up it’s much the same for most of the players in the banking sector, at least for now anyway. All eyes now turn to Martin Place tomorrow, as we see what effect these changes (or lack thereof), will have on the Reserve Bank’s monthly cash rate announcement. Mozo’s rate chasers will be out in force, so be sure to check our Reserve Bank interest rates page from 2:30pm tomorrow to get all the latest news and rate changes as they happen.

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In terms of Australia’s banking climate, the review looks set to cause a possibly portentous shake-up of the savings account market. Australia is one of the few countries in the developed world to currently tax bank savings at the full rate, a tag which by all reports will be shed soon, with the government preparing to offer significant tax breaks on savings. Whilst the extent of these breaks are as yet unknown, they are unlikely to match the UK model of which where individuals can deposit close to $17,000 (£10,200) tax-free. Dr. Henry is a known admirer of the UK system, yet many in the media are purporting rumours that something similar to the concessions currently in place for superannuation accounts will be announced instead. However, considering the range of options available in terms of size, scope and delivery, there’s no way to be sure till we hear what Wayne Swan has to say himself.

The tax break would also be a huge boost for Australia’s banks as it could generate billions in additional deposits, potentially lowering their funding costs through reducing the reliance on overseas finance. As a result of this, consumers could potentially receive a boost with regards to home loans payments. The banks have been very quick to use high funding costs to justify mortgage rate rises above that of the Reserve Bank‘s cash rate increases. With funding cost pressures alleviated to a significant degree, the government may well turn around and use this savings deposit boost as political leverage aimed at forcing banks to keep mortgage rates down and in turn, voters happy.

Either way, as far as the banking industry is concerned, consumers look to finally be on the receiving end of some good news. Mozo’s Rate Chasers will have a full wrap-up of all the implications for both deposit and lending accounts here on Monday, so be sure to check back to see what all the new changes mean for you.

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Take for instance the ING Direct Orange Everyday account: it costs nothing to get it and you can and will earn $60 for free by simply depositing money into the account, making a purchase with your Visa Debit card, and debiting money from your account ($20 each). On top of this, every time you withdraw $200 or more from an ATM, ING Direct will pay you $0.50.

Perhaps you’re the kind of person that likes credit cards rather than debit cards? Not a problem! Sign up for the HSBC Credit Card and you’ll be credited with $50 when you make your first purchase. Or the Woolworths Everyday Money Card, which gives you a $50 shopping card after you make 3 purchases. If you’re smart about these types of deals then you could be making yourself a tidy little sum for about half an hour’s work of filling in application forms. The banks are obviously hoping you will stay with them, but if you wanted you could simply then pocket the money, pay off the purchases and then cancel the card. However be careful doing this, because if you make lots of applications for credit this will show up on your credit history – and that may make it harder to get credit in the future!

Perhaps a better way of getting something for nothing from a credit card is via rewards points on a card that has no annual fee. If you always pay off your card in full, of course! There’s not many cards out there like this, but they include the American Express Gold Ascent Rewards Card, American Express Blue Sky Credit Card, the Bank of Queensland Blue Visa and the Coles Group Source Mastercard. There are also a few rewards cards that waive the annual fee if you spend more than a certain amount each year, including the Amex cards offered by AMP, HSBC and Suncorp.

If you’re the kind of person that can walk past a $50 note lying in the street then this blog isn’t for you. If not then enjoy your free lunch. I know I did.

(Note: the offers mentioned in the article were valid at the time of writing, but they may not be by the time you read it. And of course, there may be terms and conditions on each offer that we’ve not reproduced here.)

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• ING Direct Savings Maximiser
• Bankwest TeleNet Saver
• Commonwealth Bank NetBank Saver
• Westpac eSaver
• ANZ Online Saver

Every Friday, UBank reviews the competition and makes changes as they see fit. The question is: will UBank take the bait and add the Citibank Online Saver to its list? If it does, it will be forced to match Citibank’s introductory rate of 5.5%. If it doesn’t, would UBank’s customers feel it is shirking its promise to lead the field? With the fickle high-interest savings account market largely driven by interest rates, can UBank afford to concede defeat over Citibank’s introductory period?

If Ubank fails to match the Citibank rate we could well see a raft of increasingly technologically and fiscally savvy consumers opening a Citibank Online Saver account for six months to take advantage of the higher rate and then transferring it back across to their USaver when the promotional period ends. With the ease of online money transferring and account application, this could pose a real and direct threat to the USaver.

As the adage goes, ‘you can’t win a war on a peacetime budget’, and the longer UBank fails to acknowledge the threat posed by Citibank, the greater chance it has of losing what market advantage it currently has.

So will battle lines be drawn? Keep your eye on the fireworks right here, as we bring you UBank’s response from the front lines tomorrow.

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The answer lies in the little asterisk that sits next to Citibank’s brand new interest rate, making me a little bit uneasy – like sitting next to unexploded ordnance. First, let’s check out the big print numbers:

UBank USaver = 5.46%
Citibank Online Saver = 5.50%
UBank USaver = maximum amount of money you can have before you are subject to lower interest is $1,000,000.
Citibank Online Saver = maximum amount of money you can have before you are subject to lower interest is $2,000,000.

Pretty convincing, huh? But before you take that spare $1,999,999.99 and plunk it into the Online Saver, let’s dig a little deeper.

While Citibank does have the higher interest rate, it’s only for the first 6 months after opening the account. And then USaver has the option of setting up an automatic savings plan which gives you an extra 0.10% (for balances of up to $150,000) if you put away a minimum of $100 per month. So if you’re prepared to commit a small amount more to your savings (and $100 a month isn’t such a hard ask), you’re looking at a variable rate to 5.56% with no other strings attached.

The only real benefit that the Citibank account has over the USaver is that you can have up to $2,000,000 in your account before the interest rate drops back to their standard variable rate of 4.25%. Whereas the USaver rate stays at a minimum of 5.46% for balances up to $1,000,000.

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The assassination of Archduke Franz Ferdinand by Gavrilo Princip in 1914. Germany’s blitzkrieg through Poland in 1939. Coca-Cola’s launching of ‘New Coke’ in 1982. The “I’m a Mac” ad campaign launched by Apple in 2006. All sparks that lit the fuse of war, whether military, cola or computer driven.

Swift’s words have rung true once again, as Citibank today launches its new Online Saver account, and in doing so, sparking the powder keg that is the savings account market. The once stagnant savings account market has been rocked in recent months, with UBank’s high interest rate without terms or conditions setting a seemingly unassailable benchmark for the competition against the backdrop of steady Reserve Bank rate rises pushing savings rates higher and higher. Whilst Citibank’s rate is only promotional for 6 months, it does see the first savings account rate from any competitor to better what UBank’s USaver base rate has to offer.

Stay tuned as we bring you more updates from the front lines over the coming days as we run the rule over the new Citibank Online Saver and see what UBank’s response will be. Fingers crossed we don’t get caught in the crossfire.

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Also of great news to existing account holders, was UBank’s rate assurance last night, declaring that until the end of the year at least, that USaver interest rate will not fall below that of their chief rivals (including introductory promotional rates), directly labelling accounts by ANZ, BankWest, Westpac, ING Direct and Commonwealth Bank as their chief competition (though surprisingly no Raboplus…).

So the time’s never been better to snap up a USaver account, once again a good 0.2% or more above its rivals. Get in quick while the rate assurances are hot I say!

Want to make up your own mind? Compare Savings Accounts on Mozo.com.au