Money Minder of the Year

With strong competition between banks helping to keep interest rates up and costs down, savers will benefit if they shop around

With the top 12-month term deposits paying just 1.9%, savers, investors and retirees need to shop around to get the best deal. It’s especially true when all signs point to these rates not going up any time soon. But if this environment has an upside it’s that it forces financial institutions to compete harder, squeeze their margins ever more tightly and innovate. Making this imperative is the fact that just as interest rates have been falling, pressure to lower bank fees has been rising.

ME Bank has again won the Money Minder of the Year award for its combination of competitive term deposit rates and savings accounts that can pay a maximum interest rate of 1.8%, although the regular rate is much lower. Its term deposit interest rates were, meanwhile, in the top five for both three and five years and in the top 10 for one year.

ME pipped the other term deposit products for the title because it had a weighted interest rate of 1.5% across the one-year, three-year and five-year maturity periods, according to data from Infochoice.

“We regularly monitor the competition to keep abreast of any key changes to interest rates. While this is only one factor that impacts our pricing, it’s clearly an important input as it reflects the sort of information many customers will look at as part of their savings planning,” says Craig Ralston, group executive, customer banking at ME Bank.

Besides competitive rates, it makes earning the 1.7% bonus rate simple. To qualify, account holders only need to complete four tap-and-go transactions each month.

And to show its support during Covid-19, the bank gave customers the 1.8% rate in June regardless of the number of tap-and-go transactions they made.

It hasn’t been all plain sailing for ME. It was heavily criticised after changing its redraw amounts for more than 20,000 borrowers in April (it has more than 500,000 customers). The bank has since reversed the decision, but not before drawing public ire.

Asked why the bank deserves the Money Minder of the Year award despite the backlash, Ralston says: “ME is still the same bank we always were, but like all organisations we can make mistakes. The mistake we made with redraw was poor communication – not telling customers we were adjusting their redraw limit before we made the change.

“We recognise that we fell short and when it comes to customer trust, we think it’s important to own your mistakes – we can do better and we will.”

In second place was the customer-owned and aptly named Greater Bank, which operates in NSW and south-east Queensland. Savers looking to put money away for more than one year can get interest rates that rank in the top 10 over one, three and five years. However, the shorter-run term deposits, while still competitive, ranked slightly lower.

Their Bonus Saver and Lifesaver savings accounts were market leaders, paying among the highest rates, especially if savers can keep their balances growing.

In third place, Macquarie Bank was also top 10 for most term deposits, although in some categories it was just edged out by ME and Greater Bank.