One of the most popular savings accounts in Australia, ING’s Savings Maximiser, will change conditions for savers to earn its bonus interest rate.
These changes, which now require savers to increase their balance each month, are to incentivise customers to grow their savings. However, it may mean some customers are unable to qualify for the bonus rate if they're not careful.
The ING Savings Maximiser, made popular by the Barefoot Investor, has one of the highest bonus interest rates for a conditional savings account in the country. The current maximum rate on this savings account is 1.35 per cent, having been slashed from 1.50 per cent in November.
As of 1 March 2021, Aussie savers will now need to meet the following conditions to earn bonus interest:
- Hold an Orange Everyday account
- Make 5+ card purchases that are settled (not pending)
- Deposit $1,000 into your ING personal account
- Ensure your balance is higher each month
Customers unable to meet all conditions may only earn a base rate of 0.05 per cent.
An ING Spokesperson commented to RateCity on the updated Savings Maximiser conditions: “This change, that will come into effect in March, is about encouraging customers to grow their savings each month, by whatever amount they can afford.”
“We appreciate not everyone may be in a position to save when the changes start so we encourage customers that are on payment pause to reach out and speak to us about how we could potentially help them.”
Aussie savers feeling the pinch in 2020
Savings accounts have taken a beating this year. The Reserve Bank of Australia cutting the cash rate to a new low of 0.10 per cent has allowed for a record-breaking low interest rate environment for savings accounts.
In fact, RateCity research shows that from 1 January to today, the average conditional savings account rate fell from 1.49 per cent to 0.73 per cent.
|Date||Average conditional rates|
|1 January 2020||1.49%|
|2 December 2020||0.73%|
With most savings rates sitting below 1 per cent, meeting bonus rate criteria is more important than ever for customers with conditional savings accounts.
And while rates of return are not quite what they used to be, it’s still the difference between account growth and almost nothing. RateCity research found that the majority of conditional savings accounts in the marketplace have base rates under 0.10 per cent.
Strict savings account conditons are not new
Meeting conditions on some savings accounts is not a new or unique requirement.
Some of the most competitive accounts in the market are designed so that customers must meet some conditions to earn bonus interest. This is, as mentioned above, to encourage savers to grow their nest eggs.
Westpac’s Life savings account (for those aged 18-30) asks customers to grow their savings each month to earn its generous 3 per cent bonus interest rate.
Australia’s biggest bank, CommBank, also includes this condition in its popular Goal Saver account. However, it also offers an alternative ongoing savings account – the NetSaver – that does not have this condition.
This added condition may come to shock for customers who use the Savings Maximiser for short-term savings goals, or occasionally dip into their savings.
RateCity conditional savings account tips
- Set a budget. If you have a conditional savings account that requires you to grow your balance each month, ensure you’re setting aside enough in your budget to earn that bonus interest rate.
- Make good habits. If you’re prone to dipping into your savings, you may want to work on your own financial habits or reassess your budget to prevent this. Even consider creating separate savings accounts for funds that you can touch, and one you only use for long-term goals.
- Use financial tools. There are a raft of helpful financial tools, such as ING’s Round Up tool, that can help you to grow your savings account balance each month. If your savings account includes this feature -- that rounds up each purchase you make to the nearest $1 or $5 and deposits the ‘spare change’ into your savings account -- then consider turning it on to help meet bonus rate conditions.
- Keep an eye out for fees. Some savings accounts can charge a raft of fees, such as account keeping fees and foreign transaction fees. Just because you’re meeting conditions doesn’t mean your balance is not being stung in other ways. Check out your savings account product disclosure statement for a breakdown on any potential fees and try to avoid them, if possible.
- Compare your options. As interest rates continue to fluctuate in this low-cash rate environment, it’s more important than ever to ensure your account is staying competitive. Do your research around what your savings provider is offering you, and what other options are out there.