Boost your savings as term deposit interest rates rise

SAVERS stashing their cash have finally been given reason to celebrate following the eruption of a term deposit among financial institutions.

Term deposit rates have increased this month after an interest rate war erupted on fixed saving accounts.

SAVERS stashing their cash have finally been given a reason to celebrate with the eruption of a term deposit war among financial institutions.

Borrowers have been revelling in the record-low interest rate environment for some time and now savers have finally been given a boost too with banks pushing up fixed rate deposits deals this month.

Following the Reserve Bank of Australia’s cash rate cut to 1.5 per cent, many lenders including the big four are on the hunt to attract savers to help meet their regulatory requirements.

New analysis from financial comparison website Mozo found term deposit rates have climbed at all of the big four banks.

Mozo spokeswoman Kirsty Lamont says the “tide has finally turned for savers” who can now enjoy increases to fixed rate deposit deals.

“We are definitely seeing a term deposit war and it’s a turn around for savers who have endured years of sliding returns since the RBA began cutting the cash rate in November 2011,’’ she says.

Lenders including the big four are on the hunt to attract savers to help meet their regulatory requirements.

“The banks are doing this in response to capital liquidity regulations so they need to have stickier deposit customers who will be on their books for a longer period of time and that’s why they are increasing rates.”

Their database shows a number of the big four offering rates among the best in the market which is unusual but signals their need to attract more deposits, Lamont says.

About one third of all term deposit providers in Mozo’s database have increased their one to three-year term deposit rates this month.

John Edginton, the chief executive officer of term deposit marketplace Cashwerkz, says borrowers should be going on the hunt for the best deals possible because rates do vary among institutions.

“Sometimes people do tend to stick with the major banks, but some of the second and third tier banks also offer some good interest rates too,’’ he says.

“It’s worthwhile considering all of those banks but if you have money sitting there that’s getting less than the current marketplace then look at moving the money into a term deposit.”

TERM DEPOSIT RATES

Banks 1 year 2 year 3 year

ANZ 3% 3.2% 2.25%

CBA 3% 3.1% 3.2%

NAB 2.4% 3.10% 3.20%

Westpac 3% 3.1% 3.2%

Market best 3.11% 3.2% 3.25%

Market average 2.67% 2.73% 2.75%

Source: Mozo.com.au

Originally published as Boost your savings as term deposit interest rates rise