UPDATE: Up Bank, the fast-growing mobile-only bank favored by Gen Z and Millennial Australians, has ignited a firestorm of backlash with its newly announced interest rate changes. The bank’s decision to implement a “dual interest rate” system, effective from September 2023, is leaving its nearly one million customers appalled and considering alternatives.
Starting next month, Up Bank will offer a 4.85% annual interest rate on savings accounts, but with a catch: customers must avoid withdrawing funds to maintain this rate. Any withdrawal will plummet the interest rate down to just 1.5% for the month. This radical shift has many users questioning the bank’s commitment to their financial well-being.
Social media is ablaze with criticism as customers express their frustration through viral TikTok videos and widespread posts on Reddit. “It feels like a bait and switch,” one user lamented, highlighting the discontent brewing among Up Bank’s loyal fanbase.
“The level of control over that and the hoops you have to jump through are just so unattainable for most people,” said TikToker Steph, known as Abundant On A Budget. “It feels like they’re now penalizing their customers for using the bank the way that it was apparently intended.”
This sentiment is echoed by many users who feel the bank has reversed its earlier messaging. Up Bank had marketed its savings accounts as tools for everyday financial management, encouraging users to have separate accounts for various needs, such as rent or groceries. Now, the new interest structure appears to punish them for those very practices.
Long-time customer Madison O’Nion, who has been with Up Bank for six years, shared her disappointment, stating she is contemplating switching banks due to the interest rate changes. “The interest rate savers were the reason I moved to Up in the first place,” she said.
Even self-proclaimed super fan Laura Masia expressed doubt: “I adore the 2Up functionality and $0 ATM fee when traveling, but these changes make me question whether I should stay.” Laura highlighted how the initial appeal of Up Bank’s savings system aligned with popular budgeting methods, making it easier for users to manage their finances.
Despite the growing backlash, which has resulted in over 11,000 negative emoji reactions to the in-app announcement, Up Bank defended its decision. A spokesperson remarked that the changes aim to provide a fairer approach to rewarding customers actively saving for specific goals, rather than treating all funds equally.
“Not all dollars in Up Savers serve the same purpose,” the spokesperson explained. “Some are tucked away for big dreams, while others cover bills or everyday splurges. This new model allows for more personalized rewards based on how customers actually use their accounts.”
In response to customer concerns, Up Bank has promised to enhance user experience with visual cues and smart nudges within the app, aiming to help customers maximize their interest earnings. They emphasized their commitment to supporting users during this transition, encouraging open dialogue about the changes.
As the situation develops, the question remains whether Up Bank can regain the trust of its young clientele or if customers will choose to withdraw their funds and seek alternatives. Stay tuned for the latest updates as more information becomes available.
