Term deposit rate rise good for retirees
Editor's note: This article was published in August 2016. Compare the latest term deposit rates.
Savers are being rewarded despite record low cash rate.
Earlier this week the Reserve Bank of Australia (RBA) cut the official cash rate to a record low 1.50%. While a second rate cut in 2016 was anticipated, what the banks did next was not.
Rather than passing on the full rate cut to customers, Australia's banks gave retirees and savers something to cheer about by raising term deposit interest rates.
The Commonwealth Bank of Australia (CBA) announced it will raise its one-year term deposit rate 0.55% to 3%, lift two-year deposits to 3.1% and increase three-year term deposits to 3.2%.
NAB decided to lift eight-month term deposits by 0.85% to 2.9%.
ANZ will boost rates for its one-year advanced notice term deposits by 0.6% to 3% and two-year deposits by 0.75% to 3.2%.
Westpac customers will see one-year term deposit rates increase 0.55% to 3%, two-year deposits rise 0.45% to 3.1% and three-year deposits grow 0.55% to 3.2%.
Outside of the big four, St. George, BankSA and Bank of Melbourne are all upping their one-year term deposit accounts by 0.55% to 3%. Bankwest is also raising its 12-month term deposits to 3%.
The rate changes will largely be implemented by next week. Here's the full list:
| Financial Institution | Product | Previous rate | New rate | Change | Date effective |
|---|---|---|---|---|---|
| Commbank | 12 month Term Deposit $50,000-$1,999,999 | 2.45% | 3.00% | 0.55% | 19 Aug |
| Commbank | 24 month Term Deposit | 2.60% | 3.10% | 0.50% | 19 Aug |
| Commbank | 36 month Term Deposit | 2.70% | 3.20% | 0.50% | 19 Aug |
| NAB | 8 month Term Deposit | 2.05% | 2.90% | 0.85% | 8 Aug |
| ANZ | 12 month Advance Notice Term Deposit | 2.40% | 3.00% | 0.60% | 5 Aug |
| ANZ | 24 month Advance Notice Term Deposit | 2.45% | 3.20% | 0.75% | 5 Aug |
| Westpac | 12 month Term Deposit | 2.45% | 3.00% | 0.55% | 8 Aug |
| St.George | 12 month Term Deposit | 2.45% | 3.00% | 0.55% | 8 Aug |
| BankSA | 12 month Term Deposit | 2.45% | 3.00% | 0.55% | 8 Aug |
| Bank of Melbourne | 12 month Term Deposit | 2.45% | 3.00% | 0.55% | 8 Aug |
| Bankwest | 36 month Term Deposit | 2.90% | 3.00% | 0.10% | 9 Aug |
| Bankwest | 12 month Term Deposit | 2.85% | 3.00% | 0.15% | 9 Aug |
| Bank of Queensland | 12 month Term Deposit | 2.75% | 3.05% | 0.30% | 9 Aug |
| Bank of Queensland | 24 month Term Deposit | 2.60% | 3.15% | 0.55% | 9 Aug |
| Bank of Queensland | 36 month Term Deposit | 2.65% | 3.25% | 0.60% | 8 Aug |
| Bank of Sydney | 3 month Term Deposit ($1000-$9,999) | 1.85% | 1.60% | -0.25% | 4 Aug |
| Bank of Sydney | 3 month Term Deposit ($50,000-$99,999) | 2.35% | 2.10% | -0.25% | 4 Aug |
| Bank of Sydney | 12 month Term Deposit ($1000-$9,999) | 2.05% | 1.80% | -0.25% | 4 Aug |
| Bank of Sydney | 12 month Term Deposit ($50,000-$99,999) | 2.65% | 2.40% | -0.25% | 4 Aug |
| Newcastle Permanent Building Society | 12 month Term Deposit | 2.00% | 2.50% | 0.50% | 8 Aug |
| IMB | 48 month (4 Year) Term Deposit ($5,000 -$24,999.99) | 2.90% | 2.80% | -0.10% | 5 Aug |
| IMB | 60 month (5 Year) Term Deposit ($5,000 -$24,999.99) | 3.10% | 3.00% | -0.10% | 5 Aug |
| Westpac | 12 month Term Deposit | 2.45% | 3.00% | 0.55% | 8 Aug |
| Westpac | 24 month Term Deposit | 2.65% | 3.10% | 0.45% | 8 Aug |
| Westpac | 36 month Term Deposit | 2.65% | 3.20% | 0.55% | 8 Aug |
Mortgage holders lost out, as lenders cut rates on home loans and business loans by less than 0.25%. CBA trimmed rates by 13 basis points, while Westpac cut by 14 basis points, ANZ by 12 basis points and NAB by 10.
The move drew ire from both sides of politics. Prime Minister Malcolm Turnbull called on the banks to pass on the full cut, while opposition leader Bill Shorten renewed calls for a royal commission into banking.
The decision to hike up term deposit rates follows the Australian Prudential Regulatory Authority's (APRA) ruling in April, requiring 15 of Australia's largest banks to maintain a stable funding profile by 2018.
A report by Macquarie Securities revealed Westpac, ANZ and NAB will need to raise an additional $9 billion, $14 billion and $19 billion of term debt, respectively, by 2018. CBA currently meets the ratio requirement.
If you want to take advantage of increased interest term deposits or get a head start on your retirement, compare pensioner savings accounts to find one that suits your needs.
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hello, are term deposits the only way I can invest my small inheritance, as I am retired I cannot put it into my super fund. I of course want a return, I am long term CBA I have been on your pages and 3.2% soon, what is it for 5 year term?? I am new to this process , so any view on this would help immensely. Thank you for your time and interesting pages. I am asking for your newsletter, so hopefully I will read up and be better informed. Carol.
Hi Carol,
Thanks for getting in touch! It’s nice to know that you’re looking to save and grow your inheritance money – you can check this page to give you more options.
Hope this helps and message back if you have further questions.
Best,
Nikki
I got $250000 maturing on the 23rd October 2018 which is the best bank to reinvest them
Hi John,
Thank you for leaving a question.
While we do not provide specific product recommendations, we can help guide you through the process of comparing options. You may click on this link to be routed to comparing term deposit rates. Kindly review and compare your options on the table displaying the available providers. Once you have chosen a particular provider, you may then click on the “Go to site” button and you will be redirected to the provider’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have. Hope this helps!
Cheers,
Reggie
Are the term deposit rates for seniors still available?what are the current rates?
Hi Aida,
Thanks for your question.
If you are looking for a term deposit account for seniors, you may compare your options on this page.
Cheers,
Anndy
When would see term deposit rates go back up to 8 percent
Hi Donald,
Thanks for your question.
Unfortunately, there is no way to say for certain when term deposit rates will go back up to 8%. You can however check our RBA cash rate announcement page to see what experts predict in this space. Please note, the experts’ predictions are based on trends but the final outcome rest solely on the RBA.
Regards,
Clarizza