NAB’s digital-only spinoff UBank has announced to customers it will from next month introduce interest rate tiers and increase the minimum deposit threshold for bonus interest rate eligibility as part of several changes to its general terms.
From 1 July, UBank will increase the minimum deposit amount – from $200 to $500 – required by customers each calendar month to qualify for bonus interest.
This amount must to be deposited into a transaction or savings account (known as ‘Spend’, ‘Bills’ or ‘Save’ accounts) held at the bank to qualify.
As well, UBank is introducing bonus interest rate ‘tiers’ based on the savings held with the institution, with different tiers earning different rates of interest (Tier 1 applying to amounts $0 to $100,000; Tier 2 between $100,000 and $250,000; and Tier 3 applying to amounts over $250,000).
While UBank is yet to confirm the bonus interest rate within each tier, customers are more than likely to receive a lower rate of interest the higher the tier.
Currently, customers, by depositing the requisite amount, can earn interest of up to 5.10 per cent per annum on a combined $250,000 held across all savings accounts. Without meeting the qualifying criteria for the bonus 5.00 per cent p.a., customers will earn just 0.10 per cent interest on a per annum basis.
As well, UBank will ban direct external payments from ‘Save’ accounts, including direct debits, PayTo, BPay, and BSB/account payments, effectively restricting external payments to the transaction-focused ‘Spend’ or ‘Bills’ accounts.
In order to make an external payment from funds in their ‘Save’ accounts, customers will first need to transfer funds to a ‘Spend’ or ‘Bills’. As well, customers will need to manually update their direct debit payments at payments-receiving businesses to account for this change.
UBank confirmed, however, that the change will not apply to Direct Debits made to UBank home loan accounts (UHomeLoan), scheduled payments to a ‘Neat’ or ‘Flex Home Loan’ or scheduled BPAY payments set up before 1 July 2024.
UBank said the decision to restrict the direct outflow of funds from its Save accounts was to ensure the account maintains its as a savings-oriented function, helping customers “hit” their savings goals earlier it said. However, retention of deposits no doubt remains a priority for the bank – as it is for most of its peers – to preserve liquidity and fund its growing lending book.
In the year to September 2023, UBank grew its deposit book by 29 per cent, reaching a total of $18.6 billion, while its mortgage book jumped by 24 per cent over the same period, reaching $12.7 billion.
The digital-only bank, launched in 2008 and merged with rival digital-only bank 86,400 in 2021 after the latter’s acquisition by NAB, counts more than 700,000 customers (as of June 2023), with the majority of new customers under the age of 35.
