the mozo blog

ING Direct has just taken the wraps off its new “Orange Everyday” account.  ING Direct have been hinting for a while now that this transaction account would refund fees charged by ATMs when you withdraw your money.  Now the full details have been announced, and the bad news is that the much-anticipated ATM fee refund only applies if you withdraw $200 or more.  According to the latest RBA statistics, the average ATM withdrawal is about $180.  So in looking for the best transaction account, you really need to consider whether the way you use your account matches the conditions each bank has attached to their offering.  Are you happy to jump through their hoop?

If you always take out $200 cash or more, ING’s Orange Everyday account certainly is worth considering:

• ATM fee rebated from any ATM in Australia if you withdraw $200 or more.
• EFTPOS is free, and ING pays you 50c if you withdraw $200 or more as cash out via EFTPOS.  Yes, that’s right: they pay you to take cash out.
• $20 bonus paid on each of your first salary deposit, direct debit and Visa Debit purchase, if you do them before 2 November.
• Interest: none, but you can link to their savings account.

If you always deposit your salary to your transaction account, the BankWest Zero Transaction account may suit:

• ATM fee rebated from any Big 4 (or BankWest) ATM, regardless of the amount.
• EFTPOS is free.
• You must deposit $2000 a month or they’ll transfer you to a different account.
• Interest: none, but you can link to their savings account.

If you keep a few grand in your transaction account, or can’t be bothered transferring to and from a separate savings account, then you might prefer an account that pays some interest rather than worrying about the fees.  For example, the AMP First account pays 4.35% interest, charges $5 a month, and cash is free at nab ATMs, RediATMs and EFTPOS.

And of course if you’d just rather stick with using one bank’s own ATM, most offer an account with no transaction fees for about $4 a month.  Some of these pay a little interest, and some even waive the account fee in certain circumstances.

The move by ING Direct could encourage the major banks to look for new ways to offer fee-free banking, particularly if Brett Morgan, ING Direct’s Executive Director of savings gets his way. “We want to become the Australian consumer’s main bank, their favourite bank; they may bring their whole banking relationship to us”.  It will be interesting to see how many people are happy to do things the ING way.  And it will be interesting to see what other products come out in response, and what sort of conditions are attached.

Compare bank accounts with Mozo.com.au

The Reserve Bank might have taken the axe to interest rates over the last six months, but savers needn’t despair quite yet.

Savings rates are still extremely competitive. New players like AMP and ANZ’s SmartyPig have recently launched high interest accounts, while challenger brands like RaboPlus and ING DIRECT continue to keep the banks on their toes.

Now that interest rates are settling down after a flurry of cuts, it’s a great time for savers to check their current rate against the best on the market to ensure they are still getting a good deal.

With this in mind, the team at Mozo has put together our Top 5 Tips for comparing savings accounts.

1. Promo rate tricks

Be wary of promotional savings rates that are only available for a limited time. Some savings accounts advertise headline rates of up to 4.5%, but after the first three or four months these rates drop right down, often to less than 3.0%.

Unless you are the sort of person who actively moves their savings every three months, or you only want a short-term savings product, you will be better off with an account that has a competitive ongoing rate. The RaboPlus savings account offers 4.0% on call with no nasty small print.

2. Provider track record

Look at the financial institution’s track record on savings rates. Is the advertised rate just a good rate today, or is the institution known for offering consistently competitive rates?

Mozo recently analysed the interest rates track record of the major savings providers and found that over the last six months, 8 out of 17 institutions have cut savings rates by more than the Reserve Bank. By contrast, RaboPlus and ING Direct have absorbed a significant percentage of the base rate cuts to maintain consistently competitive high interest savings accounts.

3. Interest rate conditions

Understand the conditions attached to an advertised interest rate, such as whether you need to maintain a minimum account balance or deposit a certain amount each month.

For instance the BankWest Regular Saver account offers a market-leading rate of 5.0% but you need to deposit between $50 and $500 per month, and make no withdrawals, or you’ll earn 0% instead.

If you’re not 100% sure that you’ll be able to meet these sorts of account conditions each month, go for a savings account without hurdles instead. The Members Equity Bank Online Savings Account has a competitive 4.0% interest rate with no strings attached.

4. Linked accounts

Check whether the institution requires you to open a linked bank account along with the savings account.

This is an increasingly common condition attached to high interest savings accounts. In addition to the hassle of having to open a separate account to access your savings, you may also get hit with additional bank fees.

The alternative is a new breed of accounts like the AMP First account, which offer high interest and everyday transaction access all in the one account. The AMP First account gives you easy access to your money via ATM, EFTPOS, online and cheque, plus a competitive 4.35% on your savings.

5. Accessing your cash

Work out what sort of access you need to your cash. If you’re happy to leave it under lock and key for a period of time, consider term deposits as an alternative to savings accounts.

Term deposits protect you from further drops in interest rates and exist for terms of anywhere from 30 days to 3 years. Right now UBank is offering 4.51% on 90 day term deposits and Macquarie Bank has 2 year term deposits at 4.5%.

Compare savings accounts now