Up announces interest drop to 1.1 percent

coolrunnings on 01/10/2020 - 13:19
Last edited 01/10/2020 - 13:28

This is a major drop announced by Up and really depressing.
I would maybe move my savings to MyState if I had any confidence they will keep their rate at 1.5% but I kind of get the feeling as soon as I go through the trouble of moving accounts it will get cut as well.

Any suggestions on alternative investments where to get a decent, secure return but also maintain liquidity in these hard times?

#

From the 1st of November 2020, we're
changing the interest rate applied to Up
Savers.

What’s changing:

  • Bonus interest rate will change from
    1.5% p.a. to 1.1% p.a.

  • The base interest rate will change from
    0.1% p.a. to 0% p.a, and

  • The bonus limit will increase from $50K
    to $1M

You'll still need to make five transactions
per month to be eligible for the bonus
interest rate. On a eligible balance of
$50,000 this would mean a reduction of
approximately $30.82 per month.

Financial

Related Stores

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Comments

  • capslock janitor on 01/10/2020 - 13:23
    +1

    Bonus interest rate will change from
    1.5% p.a. to 11% p.a.

    Awesome.

    • coolrunnings on 01/10/2020 - 13:29

      Nice catch. I ran the screenshot through OCR and didn't look closely. Fixed.

  • iforgotmysocks on 01/10/2020 - 13:43
    +8

    Looks like they can't keep it up…

    • burningrage on 01/10/2020 - 16:01

      Just like in everything, there is only one way once you're up, it's down.

    • JIMB0 on 01/10/2020 - 16:02

      They're just sticking it Up Savers

  • soan papdi on 01/10/2020 - 13:48

    Interest rates will continue to fall. Maybe put it up in an index fund ETF with Fidelity or Vanguard. Over a year or two you should get more than 1.5% returns

    • Seraphin7 on 01/10/2020 - 15:56
      +6

      So long as equities don't take another 40% tumble …

      • soan papdi on 01/10/2020 - 16:11

        Yes, it is of course possible. Hence my suggestion to try an index fund. If OP needs the money over the next few months, then it's not a good idea but over the next year or two, index funds should return more than 1.5%. Just a suggestion, OP should decide based on their appetite for risk.

        • Seraphin7 on 01/10/2020 - 16:32
          +4

          If the index falls by 40%, then the funds linked to that index will fall by 40%

          • soan papdi on 01/10/2020 - 16:37

            @Seraphin7: Yeah I'm aware of that. My point is about time in the market. OP will likely make more than 1.5% if they don't need the money for the next few years. There's always risk and OP needs to think if they're ready for it. If not, just park the money and quit complaining about poor savings rate.

            • Seraphin7 on 01/10/2020 - 16:39
              +4

              @soan papdi: That's cool, but my point is that suggesting you'll beat bank interest "over a year or two", presumably by investing in equities is generally not considered a wise approach.

  • SelfMade on 01/10/2020 - 13:51
    +3

    Pretty much no point in keeping savings…in 'real' terms you're loosing.

    Invest in assets.

    • EightImmortals on 01/10/2020 - 14:28

      New car?

      • SgtBatten on 01/10/2020 - 14:46
        +2

        yes, with all the options, especially paint and leather protection

        • EightImmortals on 01/10/2020 - 15:30

          I'll take two! What could go wrong?
          So spurred on by this post I checked my banks current term deposit rates and basically I can reinvest our nest egg at .8% to 1% interest. Inflation is running at 2.2% so in effect we are losing 1.2 to 1.4% PA on our savings.

          Brilliant.

          • brendanm on 01/10/2020 - 15:48

            @EightImmortals: Yep, crazy to keep money in the bank at this point.

            • EightImmortals on 01/10/2020 - 16:41
              +1

              @brendanm: True that but I don't know what else to do with it ATM. Real estate and the stock market is ready to collapse IMO (sometime in the next 6-12 months maybe?) despite the amount of money governments are pumping in to keep inflating things. I'm not game to get 'too much' precious metals and have some in cryptos as well but wouldn't put all my eggs in that basket. Both of those could go off big time if we have some kind of banking black swan event. So apart from losing value keeping it in the banking system I'm also concerned about the bail-in laws that have pushed through in the last couple of years and the tenuous nature of the $250000 government deposit guarrantee. Interesting times. :)

              • SelfMade on 01/10/2020 - 21:03
                +2

                @EightImmortals: Spending on renovations for your home would be a great use, increases the property's value and improves your lifestyle too.

  • vikvance on 01/10/2020 - 15:20

    I found Judo Bank while doing some random Googling. They claim to pay 1.36% on a 3-month term deposit, when the interest is paid at maturity. They also claim they are backed by the Government deposit guarantee.

    https://www.judo.bank/personal-term-deposit

    I have never dealt with them, so I have no idea if they are legit.

    • Seraphin7 on 01/10/2020 - 15:58

      Judo are a new and small bank. Got created a year or two ago. They hold a banking licence like everyone else and therefore are able to access to government guarantee scheme like everyone else. I cannot speak to their risk profile vs. any other ADI.

      Depositors in this or any other bank must carry out their own due diligence.

  • RotundPolarBear on 01/10/2020 - 15:23
    +1

    I use Macquarie which has 1.35%. Nice app and website. No transactions or deposit requirements I don't think.

    • Seraphin7 on 01/10/2020 - 15:59
      +2

      This is one of the better options at the moment. As you say, no real catches to earn the rate that makes it at least much more straight forward than many.

      • Brodo Faggins on 08/10/2020 - 23:49

        I agree no catches or fees with linked savings account, and app/tech is very user friendly (haven't tried internet portal at all).

        Moved my entire savings portfolio from big bank A offering max 1.25% (at the time) to Macq at 2.5% (savings accounts are higher paying than TD's at this point too).

        Researched and recommended from Canstar with the highest interest / no fee / no min. bal. / no min. spend / online setup.

        I was looking to move around again, since Macq is at a confirmed 1.35% at the moment - however if this is the highest rate these days then no point (also no comment…)

        The only drawback I personally find is the time delay in their house releasing payments to other banks. Called up an agent questioning what took so long as it wasn't the first transfers between banks. Transferred $5k from big bank A, which was received instantly in the live call to Macq, and the same payment back to bank A and took 1 full business day. This was 2pm Tues or Wed arvo from memory. Not very good when you need the funds urgently.

  • Pam74 on 01/10/2020 - 15:29

    This deal could be a good alternative for the next 4 months?
    https://www.ozbargain.com.au/node/569806

  • screensaver on 01/10/2020 - 15:42

    I saw on the news last week that the govt is dropping restrictions on banks for lending, that may help

    • EightImmortals on 01/10/2020 - 16:44
      +3

      Isn't that what caused the 2008 gfc?

  • Seraphin7 on 01/10/2020 - 16:31
    +1

    Whether we like it or not, interest rates are going to be at a low ebb for the foreseeable future. The government and the Reserve Bank want that money spent, either by consumers in the first instance, or invested and then spent by business.

    Hard times if you're just trying to stay low risk.

    • nfr on 01/10/2020 - 17:35

      If they want people to spend, maybe they should practice what they preach? Would be more convincing if the pollies and RBA bureaucrats spend all their net worth at Harvey Normans.

  • screensaver on 01/10/2020 - 16:44
    +1

    ING is 1,5 I think

    • Lurk Hartog on 02/10/2020 - 07:54

      For now. But they've followed UP in recent interest rate cuts so likely will again.

  • screensaver on 01/10/2020 - 16:46

    You can get 4.5% plus some Qantas points at La Trobe 12 month term deposit but its not a bank

    • nephilim on 01/10/2020 - 18:32

      It says not guaranteed, so no different to all those low risk deals in money magazine with same rate

  • Drakesy on 01/10/2020 - 17:09
    +1

    Ubank is 1.6 and i've been happy with them for a while now.

    If you're under 30 Westpac'll give you 3.0% on your money (but only in 30k chunks)

  • Richardc on 01/10/2020 - 18:11

    Bank of China, 1.6% for 6 months.

  • Donaldhump on 01/10/2020 - 18:30
    +6

    Vietnamese bank 7% but only good if you inherited 1.6 million

  • whooah1979 on 01/10/2020 - 18:50

    I think I already posted this an hour ago but can't seem to find it now.

    Anyway, traditional banks are dinosaurs and are dying a slow death. They can't attract new investors or keep existing ones with their rock bottom rates. Our account shows a rate 0.01% APY.

    The sooner investors take their funds out and invest in something actually gives a decent return the better.

    • cloudy on 03/10/2020 - 18:30

      The sooner investors take their funds out and invest in something actually gives a decent return the better.

      Any suggestions?

      • whooah1979 on 03/10/2020 - 20:42

        I stick to these rules when I look for a high APY. The rules are INPO except for #1.

        1. DYOR. Nobody is more invested in looking after your money than yourself.
        2. Don't FOMO. Markets move in cycles and the right investment opportunity will come at the right time.
        3. Invest only what you can afford to lose. Don't spend your lunch money, your children's tuition, the farm, etc, unless your willing to lose it.
        4. The higher the gain, the higher the risk. Low risk = <15%, Low/Medium = <50%, Medium/High = <150%, High = >150%.
        5. Take profits when it goes up and be prepared to hold when it goes down.
        6. There are plenty of scams out there, but that doesn't mean that you can't make money in the short term.
        7. Check your emotions at the door.
        8. There is no right or wrong way to invest. What works for me may not work for you.
        • cloudy on 04/10/2020 - 19:54

          Thanks, all fair points. But i guess with so many points of failure for some investors leaving their funds for lower return isn't all that bad ey?

  • een625 on 01/10/2020 - 18:57
    +4

    Diversification is always a very good bet.
    Keep 3 months of expenses in a very liquid account (ING or something), and then invest in at least a few diversified ETFs. (e.g. australian shares, international shares, australian property, gold, and bonds). If you can’t stomach the paperwork, and research, use a roboinvest app like Stockspot.

    You will get liquidity when you need it from your savings account, and then your ETFs will generate around 5% over a 10 year period or so, and they will balance each other out when one falls. Share falls usually means an increase in gold and vice versa.

    Don’t time the market, just start investing, and hold on to it long term.
    Do not invest in snake oil stuff, or something that you don’t understand, like crypto.

    With the strategy above, you can ride out the hard times, and profit during a good time long term.

    Edit: Forgot to mention, one of your most important investment is your super.
    Use a low fee super fund with a good reputation, and cancel all insurance that came with it. Do a salary sacrifice of 5-10% to it. You will get at least a 500k lump sum at the end of your career if you do it right if you earn the average salary.

    • Brodo Faggins on 09/10/2020 - 00:03

      Upvoted - this is refreshing advice!

      With cancellation of insurance, are you referring to getting a separate insurance elsewhere, from a dedicated health/life insurance company over a Superfund?

      Looking to consolidate 3 or 4 of my Super tomorrow morning - any beginner tips to look out for? Eg. exit fees / management fees / unnecessary insurance / death policy / what to look for performance wise, etc. Or perhaps you can please point me in the right direction.

      Cheers @een625!

      • een625 on 12/10/2020 - 21:35

        I mean, I don't know about you, the chances of a young person dying/getting really sick is really low. I would not get insurance, they eat up a lot of your investment long term. If you are 30, you have around 60 years to live if you stay healthy.
        If your insurance costs you 500/year, over 60 years and 5% interest per year, thats 110K.
        Everyone's different, but I think life/disability/income insurance is not needed. I mean you keep this money aside anyways in your savings and use it when you need it rather than hoping to fall ill. I mean, it's the same argument as extended warranty for your tv. If you never pay for extended warranty, and just keep the money for rainy days.

        For super, again, everyone's different. I see super as a super long term investment. If you're 30, you won't see this money for at least another 37 years. My strategy, is higher risk option for the first 25 years, and then balanced one for the rest.
        It is fairly easy to see who perform the best in terms of super by just searching, the reports are public. Choose one that suits your life choices too, general rule of thumb industry super (Aus super, hesta, etc) perform better generally than retail (bank super funds like AMP, etc). Once you choose one, then make sure you remove insurance products you don't need from it as they usually come with one.
        I can't stress enough putting extra contribution to your super pre-tax via work. It's tax at 15% rather than your marginal rate.
        For example, the Australian average salary is 82k/year. If you contribute an extra 500/month every month to your super, and you assume a very modest 5% return per year for your super for the next 37 years, you wouldve added an extra 1M dollars to your super by the time you retire.

  • OzHunterNSW on 02/10/2020 - 10:15

    Tell them to stick it…. go to a financial planer

  • Peck on 02/10/2020 - 13:50
    +1

    Rates & details change quickly and so these may have recently changed. However to the best of my knowledge:-

    Ubank Usaver 1.6%. Conditions - deposit $200 pcm but can withdraw.
    Suncorp High Interest a/c 1.5%. Conditions - deposit $200 pcm and account balance MUST GROW every month for interest in that month. Also a withdrawal transaction limit I think.
    MyState Bonus Saver 1.5%. Conditions - deposit $20 pcm but can withdraw. Must do 5 debit transactions from MyState Glide account.
    Macquarie Bank Savings Account. 1.35% after 4 months honeymoon of 2%.

    In my experience Ubank has been the easiest to use.
    Of course do your own due diligence.

    • randomthought on 05/10/2020 - 10:29

      CUA eSaver is 1.45%, only requirement is deposit min of $1000 into linked transaction account per month

  • [Deactivated] on 02/10/2020 - 13:55

    Better off paying off some debt or putting the money in an offset account if you have a home loan

  • ndea on 03/10/2020 - 10:56

    Banks don't want our money, they can get it from the government for nearly nothing.

    • Peck on 03/10/2020 - 12:32

      As rates fall their margins are squeezed.

  • RichardL on 13/03/2021 - 12:00

    Starting March 1st 2021, the bonus interest rate for Up Savers will change from 1.1% to 0.7%.

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