Best bank rates at a glance

PORTFOLIO POINT: Confused about how to find the best cash rate. A new website allows instant comparisons.

Investors looking to maximise their returns from cash, but confused about “honeymoon rates” and the independence of financial services comparison services, finally have an answer.

Earlier this week, consumer advocate Choice unveiled a new website, Compare, Ditch and Switch, that allows investors to compare interest rates across a range of products instantly.

“This is a bone we won’t let go of”, declares the website, which launched its Better Banking campaign after the Commonwealth Bank lifted its rates by 45 basis points last month, almost double the Reserve Bank’s 25 basis point rise.

For investors seeking the best place to park their cash, it also quickly and easily illustrates the difference between “special offers” from the banks and the real rates they mask.

Regular readers will recall a series of articles from Eureka Report’s investigative reporter George Lekakis that questioned the relationships between the banks and popular information websites.

To gather a complete list of interest rate information, Choice has partnered with the infomediary Mozo. When investors who click through from the Choice website to a provider, a disclaimer appears on screen explaining that Mozo may receive a payment from the provider if they choose to continue.

Mozo managing director Rohan Gamble told Eureka Report that the list is both objective and complete and Mozo does not receive payments from all the providers for leads provided.

Choice campaign director Richard Lloyd says “Choice has no advertising whatsoever and no relationship between Choice and the providers.”

The website allows the investor to compare not just the top rates on offer but clearly differentiates between the regular rate and the special rate. It also gives some indication of the restrictions placed around special rates on offer.

-What's on offer
Special interest rates
Provider	Conditions	Rate
BankWest	Max monthly deposits of $500 and no withdrawals	7.00%
Virgin Money	Four months only for sums under $250,000	6.75%
UBank	Must deposit $200 or more each month	6.51%
Citibank	Six months for sums under $2,000,000	6.45%
RaboDirect	Available until December 31, 2010, for sums under $1,000,000	6.40%
ING direct	Four months for sums under $250,000	6.35%
Qantas staff union	Rate applies beyond first $5000 and no withdrawals	6.25%
IMB	Must deposit $50 or more each month. Rate applies beyond first $5000. No withdrawals	6.25%
NAB	Offer available for four months until January 10, 2011	6.25%
ANZ	Offer applies for six months offer available until January 6, 2011	6.25%
x
Regular interest rates		Rate
Ubank		6.01%
ME Bank		5.60%
Arab Bank		5.55%
Smarty Pig		5.50%
Bank of Cyprus Aust		5.50%
Virgin Money		5.35%
Rural Bank		5.35%
Citibank		5.25%
AMP		5.15%
CUA		5.15%
Source: Compare, Switch and Ditch

As the chart shows, special rates do not last forever; they might only apply for one month or a year. Many banks are happy to extend the rates, but only if the customer requests it.

Banks that are actively seeking deposits will often give customer retention divisions at least as much authority as customer acquisition divisions to extend rates. When existing customers point out that new customers are being offered better deals to switch, they are usually given matching deals.

ING Direct recently allowed customers to apply for extension of the introductory rate via the online banking portal.

We also note that the top rating online savings account from BankWest, with an interest rate of 7%, is unusually restrictive. The high interest rate is only paid if there are no withdrawals and includes a deposit ceiling of $500 a month.

The website also offers other helpful information about the accounts and whether a specific transaction account is needed. Compare, Ditch and Switch helps customers determine whether they would be better off with a high special interest rate for a short period or an account that offered lower interest with special features.

Although the Better Banking campaign advises which bank is giving the best value for money, it does not account for other important issues to customers, such as a bank or financial institution’s credit rating and security measures.

With internet fraud on the rise, investors who bank online should ensure their personal computer is secure with a firewall and that passwords contain a combination of letters and numbers that are not shared between institutions.