There's a new player in the internet banking market, reports Leeanne Bland.
Competition in the online banking arena is hotting up, with Citibank today increasing the rate paid on its newly launched Online cash manager account to
5 per cent, 0.20 per cent above its nearest competitors, AMP Banking's Easy Saver account and Easy Street's EasySavings account.
In an unusual twist, Citibank's offering - launched last month - comes with a debit card. The bank's director of wealth management, Andrew Barnes, says the problem with most online accounts is that a customer must move funds into another account - often at a different institution - to access their money.
"Aside from the inconvenience, these customers will typically pay higher fees as a result of maintaining two accounts," he says.
Citibank's account has been structured to enable customers to conduct all transactions through the one online account. Citibank offers access to funds through the internet, phone and debit card at ATMs and Eftpos outlets.
This convenience comes at a cost. The debit card allows for two free withdrawals a month, with additional withdrawals slugged a $2 fee. No additional fees are charged when you use a non-Citibank ATM.
"Our research has shown that customers are increasingly looking to apply for and buy basic retail banking accounts online," says Barnes. "This remote access to managing money is popular with customers who do not need face-to-face contact with a financial institution and want the convenience to access their savings."
Like AMP and ING Direct's online offering, no minimum balance applies to receive the interest rate of 5 per cent.
Some online accounts, such as Easy Street's EasySavings account, won't pay interest if the balance falls below a certain amount - in this case $998.
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