- Commonwealth Bank has raised its Special Offer term deposit rate to 5.20% p.a.
- That's the highest rate on offer among the big four banks
- The term deposit market has been on the move in recent weeks as odds of another cash rate increase firm
Australia's biggest bank raised its special offer 12-month rate on Friday, lifting it by five basis points to 5.20% p.a.
ANZ had previously held a 10-basis point buffer on the top term deposit rate until it dropped its 12-month rate last Friday, falling back in line with its big four peers at 5.15% p.a.
CommBank's "limited time" special offer accepts deposits between $5,000 and $5 million with interest paid annually.
It's open to personal or SMSF customers opening or renewing term deposits either online, via telephone, or through branches.
Here's a look at the big four's best term deposit rates:
| Bank | Rate (term) | Balance amount | Interest paid | Conditions |
| CommBank | 5.20% p.a. (12 months) | $5,000 - $5m | Annually | Opened or renewed by personal or SMSF customers |
| Westpac | 5.15% p.a. (12 months) | $5,000 - $2m | Monthly, half-yearly, or annually | Existing Westpac customers opening or renewing online only |
| NAB | 5.15% p.a. (12 months) | $5,000 - $1,999,999 | Annually | |
| ANZ | 5.15% p.a. (12 months) | $5,000 - $1,999,999 | Annually |
(More on CommBank and Westpac conditions.)
Last week, Macquarie Bank lifted rates on its digital term deposit products by up to 20 basis points, with a top rate of 5.30% p.a. for a 12-month term.
However, Macquarie's relatively new digital term deposit products require a minimum investment of $25,000 up to $1 million.
Term deposit rates back on the move
Over the past two weeks, the term deposit market has been repositioning rates amid the growing prospect of further hikes to the Reserve Bank cash rate.
Smaller banks have largely led the way and, as is typically the case, currently hold the market's highest rates, as follows:
- 3 months - 5.25% p.a. (RACQ Bank)
- 6 months - 5.45% p.a. (RACQ Bank)
- 9 months - 5.40% p.a. (Judo Bank, Bank First - 270 day deposit)
- 12 months - 5.40% p.a. (Gateway Bank, Heartland Bank, Bank Australia)
- 2 years - 5.55% p.a. (Unity Bank)
- 3 years - 5.40% p.a. (Judo Bank)
- 4-5 years - 5.50% p.a. (Judo Bank)
(According to the Savings.com.au database. Rates are generally for end-of-term or annual interest payments. Lower rates may apply for more frequent interest.)
Term deposit rates are set with future cash rate movements in mind.
It can be better for banks to secure customer cash by offering attractive rates now rather than having to borrow more funds at higher rates down the track to cover their lending and operational costs.
Rate-setters will also keep an eye on the competition to try to claim their stake in the market.
Sometimes this will mean smaller lenders may choose to let the bigger players compete on six- and 12-month rates and offer their best rates on shorter or longer terms.
Some banks will also offer their best rates on seven- or 11-month terms to cater for depositors looking to collect interest outside the most popular timeframes.
When are interest rates going up?
After the hotter-than-expected July inflation data, many economists expect the Reserve Bank to raise the cash rate to 4.60% in November.
But the odds are firming for an earlier cash rate hike in September - some analysts are now even tipping there will be two increases.
Markets are currently pricing in a 72% chance of a cash rate increase later this month, up from 66% earlier this week.
Of the big bank economists, NAB has held firm to its call of a cash rate hike in September while the other three are backing November.
See also: Westpac joins big four in tipping cash rate hike
This week, the odds of a September hike firmed when Reserve Bank deputy governor Andrew Hauser gave a rare television interview, interpreted as laying the groundwork for a further rate increase.
The Reserve Bank's monetary policy board is scheduled to meet on 28-29 September.
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Want to earn a fixed interest rate on your cash? The table below features term deposits with some of the highest interest rates on the market for a six-month term.
| Bank | Term Deposit | Interest Rate | Interest Frequency | Term | Automatic Rollover | Maturity Alert | Early Withdrawal Available | Minimum Deposit | Maximum Deposit | Notice Period to Withdraw | Account Keeping Fee | Online Application | Joint Application | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.25% p.a. | At Maturity | 6 months | $5,000 | $19,999 | – | – | |||||||||||||
5.20% p.a. | At Maturity | 6 months | $10,000 | $5,000,000 | – | – | |||||||||||||
5.15% p.a. | At Maturity | 6 months | $1,000 | $1,000,000 | – | – |
