Banks fight over internet savings accounts

Westpac is the latest to offer a high interest rate savings account to customers willing to use the internet or telephone rather than its branches.

Friday, 17 June 2005

by Rob Hosking

Customers using the Online Saver account get an interest rate of 6.4% on balances over $10,000 (4% on lesser amounts) and pay no fees. Westpac is currently paying 6.8% on term deposits more than $10,000 and for longer than six months.

For terms lower than that the Online Saver gets a better return.

The move is the latest in a high deposit bidding war which has opened up between the banks.

Although it is the mortgage rate war which has attracted most of the attention, the banks are also competing to woo savers.

They are able to offer lower mortgage interest rates, and higher savings rates, because the long-term global interest rate market has been heading downwards for over a year.

Westpac is only the latest. ASB Bank and ANZ Bank have been making similar offers since late last year.

This appears to have been prompted by the branchless Bank, Supersaver, which has been offering a SuperSaver account at 6.7%.

The state owned Kiwibank has also offering Front Runner, which can be used as a high interest check account or multiple accounts which pay up to 6.6%, depending on the balance.

In Australia, ING Direct – another branchless bank – has been offering such accounts for five years and now have 800,000 customers using their high interest/no fee savings accounts.

In Australia the competition, and the fact that it is Internet only, saw a 7% rise in internet banking transactions last year.

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