Highest Interest Account Dilemma

Lrbaraz on 05/07/2013 - 23:46

Hi All,

I am in a little dilemma here with all these high interest online savers accounts and need some advise.

I have been banking with Ubank for the last 2 years and have been very happy with their interest rates as it had been the highest among all the other competitors until recently (a few months only) where I found RAMS to be higher and not just that, RAMS lets you earn that interest up to 500K while Ubank's limit is 200K.

I have opened an account late last month with RAMS but I must admit I'm a little hesitant now as I have the peace of mind with Ubank knowing it's backed up by NAB by I am not really sure if RAMS is backed up by anyone.

I am not saying RAMS is going bankrupt anytime soon but historically they are relatively new compared to NAB.

I am the worst person to know about all the Government guarantees and frankly speaking, it does my head in when I even try to read about it.

I am just curious in your opinions to know if it's worth the risk to switch all my hard earned savings from Ubank to RAMS to get the extra 0.10% that RAMS is offering (4.76% RAMS, 4.66% Ubank) or I am better off saving myself the headache altogether.

If I know RAMS is backed by a bank (one of the big ones) then I will definitely take the plunge and switch everything tomorrow.

Any opinions/ideas from your end are greatly appreciated.

Financial

Comments

  • letmecry on 06/07/2013 - 00:32

    Backed up by a, b or c bank doesn't mean they're going to take any responsibilities if somethings happened.

    If .10% does make difference, I think you should switch.

    • leiiv on 06/07/2013 - 08:22

      I would think that this is true. Backed by xxx means nothing. Otherwise, why do they need to create a new corporation (ubank)? Nab is also a bank.

      • minijumbuk on 21/11/2013 - 10:40

        Different branding… big companies do it all the time

  • georgedn on 06/07/2013 - 05:07
    +1

    rams is owned by westpac

    • nickj on 06/07/2013 - 08:53

      Exactly. It seems to be a standard big four bank strategy now to try and have a separate brand from their main brand, that pays better interest, but still allows them to keep their reputation as greedy overpriced sods unsullied on their main brand. E.g.nab has ubank, Westpac has rams, commonwealth has bankwest, and I have no idea what anz are doing.

      • iseenya on 20/11/2013 - 19:53

        ANZ also had an all online alternative brand for a while, but they folded it back into the mother brand a few years ago, somewhere around the time of the GFC I believe.

  • tooblue on 06/07/2013 - 09:27

    It doesn't matter whether it is backed by whom, as long as it is an ADI, your deposit under $250,000 is guranteed by the government in case they go under. Personally I won't worry about that. But if you do have fund over this threshold, diverfiy to other investment is a better strategy.

  • Peck on 06/07/2013 - 15:01
    +2

    I had to google ADI. To save others, here it is! ADI means an 'Authorised Deposit-taking Institution'

  • The Batman on 10/07/2013 - 23:24

    If it's backed by he government, what is the point of Ubank proudly proclaiming that they are backed by NAB??

  • rbaraz on 12/07/2013 - 01:40

    Thanks for all the feedback guys.

    As I mentioned, I am not that financial savvy person so really needed to hear it from others who have more experience.

    It looks like the best to do here is to split my monies between Ubank and Rams and make sure no one is over 250K so I can get my money back in the unlikely scenario where one of them go under?

    Does the government guarantee give you a max of 250K regardless of your balance?

    In other words if I had 10K then I am guaranteed to get it all back but if I had 350 then I am guaranteed to get only 250K back or they work it out based on a percentage of your balance? does anyone know how it really works?

  • Peck on 12/07/2013 - 11:57

    It is easy to say that banks etc are safe, and with $10k I feel 100% confident of its security. But if I had $500k to put into banks, I would be nervous too. I am guessing if there was a 'run on banks' it would encompass all similar institutions

  • gimme on 16/07/2013 - 18:09

    Anyone who's 'Playing' with 500K should NOT be asking these questions on a Bargain Forum. There's some generally good advice here and there's a lot of BS by 12 year olds. I certainly wouldn't trust my 500K to some random bargain junkie (No offense - I'm a junkie too) on OZB.

    Email/Contact the said institutions directly and get any relevant details in writing. It's called DUE Diligence.

  • thydzik on 19/11/2013 - 14:28

    interesting discussion.

    was having a look at the uBank backed by NAB guarantee
    http://www.ubank.com.au/ubank/web/general/who-we-are/ubank-n…

    "We are part of the National Australia Bank. We're developed and backed by the financial strength and global capabilities of NAB - one of Australia's most established banks"

    "Your limit is calculated by reference to the aggregate of all your deposit credit balances with UBank and NAB"

    which suggests that UBank and NAb are considered the same institution.

    http://www.guaranteescheme.gov.au/qa/deposits.html
    "A new permanent cap of $250,000 per person per institution on deposits guaranteed under the Financial Claims Scheme took effect from 1 February 2012"

  • anna10 on 19/11/2013 - 15:16

    "A new permanent cap of $250,000 per person per institution on deposits guaranteed under the Financial Claims Scheme took effect from 1 February 2012"

    Aussie banks are the least likely to fail, if there is anything safer I can't think of it off hand. Not sure if anyone has said how much they personally wish to put on deposit, but if you did have say 500K, it would be safe across 2 banks, 250 each.

    Go for the best interest rate you can get w' a well known and backed institution whether it's Ubank, Rabo bank, or whichever.

  • rbaraz on 19/11/2013 - 17:38

    These 2 banks have dropped their interest hugely in the last 2 months.

    Ubank gone down to 4.26 from 4.66
    RAMS gone down to 4.21 from 4.67

    the only compelling offer I can find now is from MEBank which is giving 4.60 for the first 5months and then I guess we have to see who is offering the best and move across.

    It's so much headache but might be worth it if you have a large amount.

  • anna10 on 19/11/2013 - 17:41

    Mentioing MEBank reminds me that some people putting cash into a deposit account of some sort may want to go onto getting say a home loan. ME Bank would be good for that too.

  • WaywardOne on 21/11/2013 - 10:30

    Switching bank accounts for under 0.5% extra interest is unlikely to net you any benefits. The time taken to transfer the money often eats in to any extra interest you will earn.

  • backpaqer on 21/11/2013 - 12:21

    And not forgetting that you pay tax on interest…unless it's in an offset account…

  • MITM on 21/11/2013 - 22:49

    I'd be walking into a big 4 bank with a printout from Ubank and saying I have $xxx @x.xx% do you want my business and what extras will you give me ? with the added comfort of a big 4 bank backup.
    They may lock you in for a term, but with rates dropping, that could be a good thing.
    As you'd know - Cash is King.

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