- Macquarie Bank's new Digital Term Deposit products allow customers to set up term deposits via app or online banking
- The digital 3, 6, 9, and 12 month products have a minimum deposit amount of $25,000
- They also come without break fees or automatic rollovers
Macquarie continues to muscle in on Australia's deposit market, largely on the back of its simple, no-conditions savings account that pays a competitive interest rate without any provisos.
It's seen Macquarie grab a 6.4% stake of the household deposit market, stealing it squarely from the clutches of the big four banks.
Now Macquarie is turning its sights to term deposits - a sector of the market where the bank admits it is underweight.
Enter digital term deposits
In a bid to provide easier access to its term deposit products, Macquarie has launched its Digital Term Deposit, available to individual and joint customers through its app and online banking.
New depositors will need to have a Macquarie transaction or savings account and a minimum deposit amount of $25,000.
A Digital Term Deposit account can be set up in minutes with deposits transferred from either savings or transaction Accounts for three, six, nine, or 12-month terms.
Here are Macquarie's current Digital Term Deposit rates (for deposits under $1 million):
| Term | Interest rate |
| 3 months | 5.00% p.a. |
| 6 months | 5.10% p.a. |
| 9 months | 5.15% p.a. |
| 1 year | 5.20% p.a. |
It's worth noting the current ongoing rate on Macquarie's savings account is 5.00% p.a. on balances up to $2 million.
Macquarie's legacy term deposit system is still the go-to for customers with lower deposit amounts and companies or trusts, although Macquarie plans to eventually transition its term deposit business to the digital system.
What is different?
Unlike many of its competitors, Macquarie's new digital term deposit offerings will not impose break fees if customers decide to withdraw their cash early.
Instead, they will earn the interest they've already accrued to the day they give the required 31 days notice of withdrawal when the interest rate for the period will switch to 0%.
There are also no automatic rollovers when terms expire, with funds and interest earned being transferred back to the customer's linked savings or transaction account.
At many banks, end-of-term arrangements can see deposits transferred into holding accounts that pay no interest or, after a grace period, automatically rolled back into the same term if the depositor doesn't act.
Accessibility the motivator
Macquarie is hoping to grow its term deposit business by allowing customers to easily shift funds themselves.
The no break fees feature may also entice existing customers new to term deposits to test how the products could work for their financial circumstances.
In recent weeks, longer-term term deposit rates have been heading lower across the market while shorter-term rates have been largely climbing.
See also:
- CommBank pumps 6-month term deposit rates, cuts 2-year rates
- Market's highest term deposit rate takes a dive
As it stands, Macquarie's 12-month rate of 5.20% p.a. sits below the best 12-month term deposit offerings of the big four, as follows:
| Bank | Interest rate | Deposit | Conditions |
| CommBank | 5.25% p.a. | $5,000 - $5m | Limited time special offer |
| Westpac | 5.25% p.a. | $5,000 - $2m | Open or renewed online only |
| NAB | 5.25% p.a. | $5,000 - under $2m | |
| ANZ | 5.30% p.a. | $5,000 - under $2m |
All rates are for interest paid at maturity.
Macquarie's three-month rate of 5.00% p.a. is far more competitive but with Macquarie's savings account offering the same rate, there is little reason for existing Macquarie customers to make the switch.
Manoeuvring in the market
In February, Macquarie revealed its market share in the term deposit space was just 1%, a figure it was keen to lift.
Term deposits are hardly a 'sexy' product, long associated with retirees looking to stash their cash reserves for guaranteed, but not always spectacular, returns.
See also: Could you live off term deposits?
But banks are particularly fond of term deposits for the relatively cheap and stable source of funds they provide.
It remains to be seen whether Macquarie can shake up the term deposit market using the same 'simple product/slick technology' strategy that has seen it win savings account customers.
Over the past 12 months, the big three - CommBank, Westpac, and NAB - have seen no growth to their deposit books while ANZ's market share has gone backwards.
Macquarie continues to make inroads with growth of more than 1.3% over the same period.
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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 | – | – |
