Up Bank, Bendigo’s fast-growing mobile only bank popular with Gen Z and millennial Aussies, has introduced a new interest rate that’s proving so disliked, people are making TikToks about it. And when you look at the rates, its no wonder Up’s surprisingly once-loyal fanbase is considering taking a hike.
Last week, Up Bank revealed to its roughly one million customers that it would be introducing a “dual interest rate” system from September. Instead of a flat 3.85 per cent p.a. rate on all saver accounts (which Up encourages users to have), users will now receive a 4.85 per cent interest rate on saver accounts — if they don’t touch their funds. However, if they make a withdrawal, that rate goes down to 1.5 per cent p.a. for the month.
It’s proven wildly unpopular among Up Bank’s customers, in part because the app encouraged people to use the savers as part of their financial planning. Have one saver for rent, another for groceries, a third for a future holiday, etc. However, this new dual interest rate system would penalise people for using the savers as intended.
“The level of control over that and the hoops you have to jump through [with the new changes], I think, are just so unattainable for most people, especially with how Up has marketed themselves as this digital cash envelope platform,” TikToker Steph — also known as Abundant On A Budget, said in a recent video.
“They’ve really encouraged you to use Savers to manage your everyday spending, and so it feels a little bit like they’re now penalising their customers for using the bank the way that it was apparently intended… it just doesn’t line up with their values and to me that feels weird.”
The scene in Steph’s comments isn’t exactly a group hug either.
“It feels like a bait and switch,” said one user.
“It’s a frustrating move given how they built the app and ‘trained’ us to use it,” said another.
The rage flowed on to Reddit, where one user called the changes “unnecessarily convoluted” while another said, “And this is good for customers… how?”
Up Bank customer Madison O’Nions, who’s been with the bank for six years, told PEDESTRIAN.TV she is considering moving banks “as the interest rate savers were the reason I moved to Up in the first place”, while self-proclaimed super fan Laura Masia said she’s also considering the move.
[Disclosure: O’Nion and Masia are employees of Pedestrian Group, the publisher of PEDESTRIAN.TV.]
“It’s a joke within my friend group how much I love Up Bank. I found the interface and gamified way of banking simplified management of my own personal finances, I adore the 2Up functionality and the $0 ATM fee when travelling,” Laura said.
“However, the recent changes have made me question whether I should stay with Up Bank or look into other banking options. Like many other young people, I’ve adopted Scott Pape‘s bucket system which initially made Up’s savers system really intuitive and appealed to so many.
“But now, with the dual interest rate system, I feel like I’m almost being penalised for building good financial habits that fit with my lifestyle.”
Despite the backlash — including more than 11,000 negative emoji reacts to its in-app announcement — Up defended the changes, saying its aim was a “much fairer approach than cutting off an entire group of Upsiders from our best rate, even though they’re actively saving”.
“Not all dollars in Up Savers serve the same purpose. Some are tucked away for big dreams – like a home deposit or a safety buffer. Others are more active — covering bills, brunches or day-to-day splurges. But under the old bonus interest system, every Saver was treated the same — even the ones doing the heavy lifting for your future,” Up Bank told PEDESTRIAN.TV
The bank reckons Grow & Flow “lets us reward Upsiders who are working toward something,” whether that’s stashing up for their first $1,000 or hustling for a house deposit. “They can earn bonus interest by making real progress on a specific goal — no matter what else is going on with the rest of their money that month,” the spokesperson continued.
Up argues this is “a much fairer approach than cutting off an entire group of Upsiders from our best rate, even though they’re actively saving”.
In terms of what the bank is doing to help customers through this transition, Up has said that they’ve “built in visual cues and smart nudges in-app so Upsiders can clearly see when they’re earning Grow or Flow interest”.
“Our goal is to help them feel in control of their setup, and empowered to optimise for what matters most.
“Importantly, Grow & Flow is designed to match how Upsiders actually use their accounts — giving more people access to a higher bonus interest rate, even if they’re just starting out.”
Finally, the bank told P.TV: “We know it’s a big change — but we genuinely believe this shift will help more people save better.”
Up Bank is open to feedback and is “encouraging Upsiders to ask questions, challenge the change, and help us keep improving the experience”.
Now, it’s just a matter of seeing if Upsiders buy what the bank’s selling — or decide to let their dollars do the walking.
Lead image: Up Bank / TikTok
The post ‘A Bait & Switch’: Up Bank Just Pissed Off A Heap Of Its Gen Z & Millennial Savers appeared first on PEDESTRIAN.TV .
