Ubank launches new 5% savings account rate – but there’s a catch

Ubank has made a few changes to the interest rate offered on its Save account which means many existing customers will now earn less interest.

Ubank has launched a new welcome bonus rate of 5% p.a. on its Save account.

This is available on large balances up to $1 million, however, it's for new customers only and is only on offer for the first 4 months after opening the account.

The bank has also made a series of changes to how interest is paid, and has cut its ongoing bonus rate.

What changes has Ubank made to its savings account?

Firstly, Ubank has introduced a new welcome bonus rate of 5% p.a. which is available for the first 4 months on balances up to $1 million. To get this rate you need to meet the $500 monthly deposit condition and you can't have held a Ubank Save account in your name within the past 24 months.

Then, the bank has cut its ongoing bonus rate from 4.85% p.a. to 4.60% p.a.

This is the rate you'll get after the 4 month introductory period ends - or if you're an existing customer. To get this monthly bonus rate you need to deposit $500 per month.

The bank has extended the balance limit for earning the ongoing bonus rate from $100,000 to $1 million.

How will the changes impact me?

Basically, this is an interest rate cut for many existing customers.

If you already have a Ubank Save account, not only do you miss out on the new 5% p.a. welcome bonus rate but your ongoing monthly bonus rate is being cut by 25 basis points.

The customers who stand to earn more interest are those with super large balances.

Previously the Ubank Save account offered a 4.40% p.a. bonus rate on the portion of your balance between $100,000 and $250,000, and then no interest at all on the portion above $250,000.

However now the welcome bonus rate of 5% p.a. and the ongoing bonus rate of 4.60% p.a. is available on balances up to $1 million.

That said, Finder data shows that the average Aussie has around $33,000 in cash savings - so this change is unlikely to benefit too many customers.

There are no changes to the monthly deposit condition of $500, and you can still make withdrawals whenever you want.

Should I switch from Ubank Save?

There are several accounts in the market right now that still offer ongoing bonus rates of 5% p.a. However, most of these have more monthly conditions to meet than Ubank and pay interest on smaller balances, so keep this in mind when comparing your options.

1. Bank of Queensland Future Saver Account

Earn an ongoing 5.10% p.a. on balances up to $50,000 when you deposit $1000 and make 5 transactions during the month from the linked Bank of Queensland transaction account. You also need to be aged between 14 and 35.

2. ING Savings Maximiser

Earn an ongoing 5.00% p.a. on balances up to $100,000. To earn this rate you need to deposit $1000 a month, grow your balance during the month and make 5 transactions from your ING Orange Everyday Account.

3. Westpac Life (18-29 year olds)

Earn an ongoing 5.00% p.a. on balances up to $30,000 when you grow your balance and make 5 debit purchases.

4. Virgin Money Boost Saver

Earn an ongoing 5.00% p.a. on balances up to $250,000 when you deposit $1000 per month, make 5 debit purchases and enable the Lock Saver feature.

5. MOVE Bank Growth Saver

Earn an ongoing 5.00% p.a. on balances up to $25,000 when you deposit $200 per month and make no withdrawals.

It's also worth noting that if the RBA cuts the cash rate next month, some (or all) of these accounts are quite likely to cut their bonus rates too.