Big banks boost savers with bigger term deposit rates

author-avatar By on March 20, 2020
Big banks boost savers with bigger term deposit rates

Image source: Commonwealth Bank

Major banks have announced significant increases to term deposit interest rates, despite the Reserve Bank of Australia's emergency cash rate cut.

The Commonwealth Bank (CBA) yesterday announced it would be increasing its 12-month term deposit interest rate by 60 basis points, to a new interest rate of 1.70% p.a. 

NAB followed CBA's lead but bettered the offer, today unveiling a 10-month term deposit with an interest rate of 1.75% p.a.   

The table below displays one-year term deposits with some of the highest interest rates on the market. 

Provider
Advertised
interest rate
Interest
frequency
 
1.40% Annually,
end of term
More details
1.40% End of term More details
1.30% Annually More details
1.30% Annually More details
1.30% Annually More details

*Rates correct as at 01 August 2020. Rates based on a $50,000 deposit.

CBA's new term deposit rate is available from today for all eligible new and existing CBA personal customers on balances from $5,000 to $2 million, for a limited time only.

“For our deposit customers, we will increase our 12 month term deposit rate by 60 bps to 1.70% p.a," CBA CEO Matt Comyn said. 

"This will be available to all personal customers, but will especially benefit older Australians relying on their savings.

"It will ensure all Australians are now able to earn a return on their savings which is more than 1.45% higher than the official cash rate."

NAB's new term deposit rate will be available from March 24 for personal customers on balances between $5,000 and $2 million. 

Westpac and ANZ are expected to make similar announcements later today. 

While these new term deposit rates are comfortably now among the highest deposit rates offered by the big four, it's important to remember that 1.70% p.a is still fairly small in the grand scheme of things. 

The current inflation rate is 1.80%, meaning any interest earned on this deposit would not earn customers any real return. 

Other term deposit changes 

Term deposit interest rates have been in freefall lately thanks to recent cash rate cuts - yesterday marked the first time in our history that the Reserve Bank of Australia (RBA) has cut the cash rate twice in a single month. 

Just in the past couple of weeks, a host of major and larger banks have made sizeable cuts to their term deposit products, including:

  • UniBank and Teachers Mutual Bank decreasing term deposit rates by 25 basis points (20 March)
  • People's Choice Credit Union decreasing term deposit rates by up to 35 basis points (20 March)
  • BOQ decreasing term deposit rates by up to 55 basis points (20 March)
  • CUA increasing term deposit rates by up to 15 basis points (19 March), decreasing by up to 25 (12 March)
  • ING decreasing term deposit rates by up to 30 basis points (18 March) 
  • G&C Mutual Bank decreasing term deposit rates by up to 30 basis points (18 March)
  • Westpac, St. George, BankSA and Bank of Melbourne decreasing term deposit rates by up to 25 basis points (17 March) 
  • AMP increasing term deposit rates by up to 35 basis points (17 March)
  • MyState Bank increasing term deposit rates by up to 50 basis points (17 March)
  • Macquarie Bank decreasing term deposit rates by up to 15 basis points (16 March) 
  • Citi increasing term deposit rates by up to 16 basis points (16 March)
  • ANZ decreasing various term deposit rates by up to25 basis points (13 March)

Some banks have increased various deposit rates, and these have been highlighted in bold. 

The average term deposit interest rate, across all terms, has now plummeted to roughly 1.35% p.a, a truly dismal number considering where rates used to be not even a year ago. 

Xinja savings account rate remains at 2.25% 

Meanwhile, Xinja has reiterated to customers that it is not cutting its market-leading savings account interest rate following the RBA's emergency cash rate cut. 

In an email to customers yesterday, the neobank's CEO Eric Wilson said Xinja's 'Stash' interest rate remains at 2.25% for now.

"That’s not to say we won’t change it in the future (it is a variable rate) however not yet," Mr Wilson wrote in the email. 

"We thought you’d like to know. We do hope you are doing ok through these strange & uncertain times."

Xinja's Stash savings account remains closed to new customers after the neobank announced earlier this month it was pausing new applications to preserve its high interest rate for existing customers. 

The table below displays a snapshot of available savings accounts with some of the highest non-introductory interest rates on the market. 

Provider
Total interest
rate p.a.
Base interest
rate p.a.
Bonus interest
rate p.a.
 
Fast Track Saver
1.65% 0.20% 1.45% Go to site
1.75% 0.25% 1.50% More details
1.75% 0.15% 1.60% More details
1.70% 0.25% 1.45% More details

*Data accurate as at 01 August 2020. Rates based on a savings balance of $10,000. Introductory bonus interest rate products not included. Sorted by total interest rates. Refer to providers' websites for bonus rate conditions.


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William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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