Term deposit wrap: CBA and ANZ cut rates

author-avatar By on January 24,2020
Term deposit wrap: CBA and ANZ cut rates

Photo by Jan Střecha on Unsplash

Several key banks have made wholesale changes to their term deposit products this week.

The jury is still out on whether the Reserve Bank will cut the cash rate next month - odds were on the RBA to cut by a further 25 basis points to 0.50% at the next board meeting in February, but yesterday's positive unemployment data has significantly lowered the odds of this happening. 

Commonwealth Bank, for example, have revised their prediction, now stating they believe the RBA will hold the cash rate steady. 

Prior to the release of the surprisingly good employment figures, several institutions had already jumped the gun by dropping term deposit rates, possibly because they were expecting the cash rate to fall. 

Some term deposits, on the other hand, have had their interest rates increased. 

Savings.com.au has summarised some of the key term deposit rate movements in the past week or so. 

ANZ cuts by 10 basis points 

In addition to dropping its Online Saver Account interest rate to the lowest ongoing rate among the big four, ANZ also took the axe to a huge number of term deposit products, lowering rates by as much as 10 basis points. 

These changes apply to terms as short as one month to as long as five years. 

The highest rate ANZ now offers is 1.60% p.a. for a seven month deposit. 

Its one year product carries an interest rate of 1.30% p.a for investments up to $99,999. 

Commonwealth Bank changes

The second major bank to make term deposit changes this past week is Commbank, which both increased and decreased term deposit rates by up to 20 basis points. 

Commbank increased rates on various eight month terms by 10 basis points, reaching a high of 1.60% p.a. 

However, it decreased interest rates on 12-month products by up to 20 basis points, with some of these rates falling to 1.05% p.a. 

A third big bank, NAB, raised its five-month term deposit interest rate by 20 basis points last week to 1.50% p.a.

ING becomes more competitive 

One of Australia's largest retail banks ING has this week dropped several term deposit interest rates by up to 10 basis points. 

But it has also increased some term deposit interest rates by up to 15 basis points, such as its one-year term deposit. 

Prior to today, ING offered a 1.75% p.a. rate on its one-year term deposit, a rate that has now increased to 1.90% p.a. 

This means ING has one of the most competitive interest rates around - for a one-year term it's only behind Judo Bank which boasts a 2.00% p.a. interest rate. 

Other changes made by ING include: 

  • 90 Day 1.10% p.a. (previously 1.20%)
  • 120 Day 1.75% p.a. (previously 1.65%)
  • 180 Day 1.80% p.a. (previously 1.70%)
  • 210 Day 1.10% p.a. (previously 1.20%)
  • 270 Day 1.80% p.a. (previously 1.70%)
  • 330 Day 1.10% p.a. (previously 1.20%)
  • 2 Year 1.90% p.a. (previously 1.75%)

Speaking to Savings.com.au about these changes, ING Head of Daily Banking George Thompson said "we review our rates regularly to ensure we’re still offering customers the simplest, most effective banking solutions and great associated benefits.”

CUA also increases rates 

One provider this week which solely increased term deposit rates is one of Australia's largest customer owned banks, CUA. 

CUA increased rates on a number of terms by as much as 20 basis points. 

Like ING, CUA has now moved up the term deposit pecking order for a number of terms to become one of the more competitive banks out there. 

For a one-year term, for example, CUA's interest rate has increased from 1.60% p.a. to 1.80% p.a, which places it just behind ING. 

Other rates to change, according to information provided by CUA, include:

  • Three month term deposit up 15 basis points (1.65% p.a. to 1.80% p.a.)
  • Five month term deposit up 15 basis points (1.60% p.a. to 1.75% p.a.)
  • Six month deposit up 20 basis points (1.65% p.a. to 1.85% p.a)
  • Nine month deposit up 10 basis points (1.65% p.a. to 1.75% p.a.)

CUA Senior Product Manager, Savings & Term Deposits, William Pescott said there had been plenty of movement in the term deposit market recently. 

"This provided CUA with an opportunity to review our term deposits and offer some higher rates to benefit our members," he told Savings.com.au. 

"It’s a priority for CUA to ensure our rates remain highly competitive and allow us continue to sustainably grow our deposit portfolio, and we will continue to regularly review rates to achieve this.”  

Other key changes 

Other banks to make changes to term deposit rates included: 

  • MyState Bank: increased and decreased various rates by up to 5 basis points
  • The Mutual Bank: increased numerous rates by up to 10 basis points 
  • Greater Bank: increased several key interest rates by as much as 10 basis points 

Market competition tends to be a key factor in changing term deposit rates. If multiple banks are increasing interest rates, then it's likely others will follow suit in order to remain competitive. 

With so many banks increasing interest rates, and a cash rate cut next month looking unlikely, it's entirely possible we could see more term deposit rates moving up in the coming weeks. 


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author-avatar
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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