064 Money Matters
SO, WHAT ARE THE NEOBANKS? Each year a new buzzword enters our conversations. This year’s hot contender is ‘neobank’.
N
eobanks let customers do all their banking via smartphone
apps. No bank branch, no paperwork, no internet banking.
That may be uncomfortable for some of us. But for millennials it can makes sense. Six out of ten 20-somethings already do their banking via a smartphone.
So what do neobanks offer? Common features include a super quick
sign-up process, the ability to bank straight from your smartphone – and at this stage at least, a limited product range. In January, Australia’s first independent neobank Xinja, launched its ‘Stash’ savings account. Linked to Xinja’s everyday bank account, it pays 2.25% interest with no minimum deposits or payments.
Another neobank, 86 400 (pronounced ‘eighty-six four hundred’) is backed by Cuscal, which supports Australia’s mutual banking sector. 86 400 has an everyday account called ‘Pay’, and a savings account called ‘Save’. The savings account pays a base rate of 0.4%, or a total of 2.25% when you deposit at least $1,000 each month into the Pay or Save accounts. Another new kid on the block is Up Bank (backed by Bendigo Bank), which has fee-free everyday banking options, plus
a savings account paying a base rate of 0.50% plus bonus interest of 1.75% on savings up to $50,000 for each month you make five debit card or digital wallet
purchases using the Up Everyday Account. More neobanks are expected to launch in Australia. But what do they have that traditional banks don’t? As you’d expect, their apps can
be impressive, often with a variety of useful features.
86 400’s app lets customers view
all their bank accounts in one place so you
get a complete picture of your finances. Up Bank offers free international transfers. Other neobanks have automatic round-up features that send small change on purchases straight to your linked savings account.
064 www.truckandbus.net.au
At some stage, neobanks will likely offer products like home loans. It will be
interesting to see how the savings of having no branch network will flow through to a better deal for consumers. Already 86,400 has a home loan with a variable rate of
their target fall in love with the persona they have created, while quickly professing their love for the victim.
For all their points of difference, neobanks essentially do much the same as regular
stories about why the scammer can’t meet in person. It’s when the scammer starts to ask for money – for whatever
3.09% – it’s a low rate but it’s not the cheapest on the market.
banks. They are a tool to manage your money, and the old rules apply. Don’t be blindsided by a whizz-bang app. Be realistic about whether you can meet the conditions required to earn the top deposit rate, and look for any unexpected fees. If you feel more comfortable with a traditional bank, then stick with it. Good money management is about what works for you – not following a hot new trend. Meantime on a totally different topic, If Cupid’s arrow missed you on Valentine’s Day, be wary of strangers declaring their love online.
Last year, Australians reported 4,000 dating and romance scams to consumer watchdog, the ACCC. A total of $29 million was lost to these scams, with victims being cheated out of an average of $19,000 – figures that are believed to be the tip of the iceberg.
It’s easy to wonder how people get caught up in these scams. But the ACCC say a growing number of victims weren’t even looking for a relationship. Plenty were just
engaging in social media or, surprisingly, online games. Beyond traditional online dating websites, the highest losses from romance scams originated on Instagram and Facebook.
Conventional dating platforms like Tinder or Match.com also had high losses in 2019. However, a new trend is that scammers are turning to online games such as
Words with Friends and Scrabble to con their victims. There are some classic warning signs to look for that you could be dealing with a
scammer. The ACCC says they try to make
That’s normally followed by complicated
reason, that the warning bells should really start ringing. The requests for money don’t always involve hard cash. Scammers are open to other options. Close to $9 million was lost by payment methods like iTunes, Steam and Google Play gift cards. The main point is that if you send money, the scammer asks for more, often using guilt to get you to dip further into your wallet. These scams are not new. Yet people continue to fall for them, and are left worse off financially, with a few emotional scars to show for the experience. That’s why a healthy dose of skepticism
goes a long way when you’re online. Never lose sight of the possibility that your new online buddy could be a crook. Some simple steps can help protect you, and your money.
Don’t give out personal information – especially your financial details – to someone you haven’t met in person
no matter who they say they are. If the
conversation swings to requests for money, the solution is easy: Stop communicating with them. Discovering that your new heartthrob is a fake can be demoralising. But that may
be a lot less damaging than being fleeced thousands of dollars – money you will never see again.
Paul Clitheroe is Chairman of InvestSMART, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine. Visit: paulsmoney.com.au for more information.