What happened to term deposit rates in April?

author-avatar By on May 01, 2020
What happened to term deposit rates in April?

Photo by João Barbosa on Unsplash

While coronavirus dominated the headlines in April, term deposit rates were quietly falling in the background.

While this won't be a problem if you already have a term deposit, as interest rates are fixed, customers seeking new places to store their cash might be disappointed at the extremely low interest rates on offer. 

In late March (our last term deposit rate wrap), the average term deposit interest rate, across all terms, was roughly 1.35% p.a.

Now, after a month of mostly interest rate decreases, that average across most providers has plummeted to 1.12% p.a, for all terms. 

The average interest rate for 12-month terms is now just over 1.30% p.a - the infographic below displays just how sharply term deposit rates have fallen in just a month. 

In total, more than 30 banks have made changes to term deposit rates over the past month, and the vast majority of those changes have been decreases. 

The banks to cut rates include majors like Commonwealth Bank and ANZ, as well as large banks like ING, Suncorp and Macquarie. 

Other banks with some market-leading rates such as Judo also lowered deposit rates. 

This all followed a number of banks announcing certain deposit terms had special increased interest rates as a part of their COVID-19 relief packages

Below we'll go into detail as to which banks changed term deposit rates, and how much rates were changed by. 

The following table displays a snapshot of 6-month term deposits with high interest rates. 

Provider
Advertised
interest rate
Interest
frequency
 
Term Deposit
0.70% End of term Go to site
1.41% Annually,
end of term
More details
1.30% End of term More details
1.25% End of term More details
1.25% End of term More details

*Rates correct as at 01 August 2020. Rates based on a $50,000 deposit for 6 months.

Term deposit rate changes - April 

Here are some of the key banks to make term deposit changes in April. 

Commonwealth Bank rate changes

Commonwealth Bank cut a number of term deposit rates by up to 20 basis points on April 20. 

These changes apply to terms from as little as two months to five years, with the 20 basis point cut applying to terms below one year. 

Commbank's highest term deposit rate is 1.70% p.a - a special rate for 12-months announced as a part of its COVID-19 relief package. 

ANZ rate changes 

ANZ decreased its Advance Notice term deposit rates by up to 25 basis points on April 16. 

These changes also apply to a range of terms for as long as five years, with the 25 basis point cut mainly applying to shorter terms. 

Per its website, ANZ's highest term deposit interest rate is a 1.35% p.a. special for eight months. 

Suncorp rate changes

On April 30, Suncorp cut term deposit rates by as much as 45 basis points, a substantial change. 

Other rates were cut by between five and 35 basis points, and all changes were applied to terms under one year. 

Suncorp's highest deposit rate is a special 1.70% p.a. offer for 12 months. 

ING rate changes 

ING is another bank to make substantial term deposit changes, cutting interest rates by up to 40 basis points on April 17. 

Other changes were between 15 and 35 basis points, and all apply to sub-one year deposits, which seems to be a recurring theme. 

ING's highest interest rate is now 1.50% p.a. for one and two-year deposits. 

AMP rate changes

AMP has cut term deposit rates by as much as 35 basis points as at April 21. 

Once more these changes mostly apply to terms below one-year. 

AMP's highest interest rate is 1.65% p.a. for six and seven-month terms. 

Judo Bank 

Although not one of the largest banks by any stretch, Judo Bank has for a while claimed some of the highest term deposit interest rates on the market, as seen in our highest term deposit rate comparison

Judo cut personal term deposit rates by up to 10 basis points on 17 April, with its highest available interest rate now being 1.85% across various terms. 

Other key term deposit changes

Although we won't list all deposit changes to take place in April (that'd take a while), here are some of the more notable ones:

  • Macquarie Bank: Cut term deposit rates by up to 10 basis points 
  • MyState Bank: Increased term deposit rates by up to 75 basis points, while cutting others by up to 20 (MyState now has quite high interest rates for certain terms) 
  • CUA: Increased term deposit rates by up to 15 basis points, decreased others by 10
  • Bank Australia: Cut term deposit rates by up to 40 basis points 
  • Bank First: Increased various term deposit rates by up to 35 basis points 
  • Bank of Sydney: Cut term deposit rates by up to 10 basis points 
  • UBank: Cut various term deposit rates by up to 25 basis points, raised others by 15 
  • RACQ: Increased various rates by up to 25 basis points
  • Greater Bank: Increased various rates by up to 45 basis points, decreased others by up to 35

While overall term deposit rates might have declined, there are still some needles in the haystack that is the term deposit market. Plenty of providers have still increased certain rates, so compare term deposits to find one with a good rate of return. 

Bear in mind that inflation is now 2.2%, so it'll be extremely difficult to find a deposit rate that matches this. 


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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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