Term Deposit Rates On The Rise

Post by Sharat on August 28, 2018 · Under banking · Comments Off on Term Deposit Rates On The Rise 

In July term deposits on tenures ranging from 1 to 3 years reached their highest level since 2017 continuing the trend of rate hikes. In June, research shows that there were ten times the number of rate hikes as there were rate cuts.  AMP, ANZ and many smaller lenders and cooperatives hiked their rates by anywhere between 5 and as many as 20 basis points. The rate hikes are in response to higher funding costs on international wholesale markets so the banks are trying to encourage more local deposits.

Term deposits are attractive now

Obviously, mortgage borrowers will be feeling the pinch to hikes in home loan rates but the good news is if you have cash in the bank, you will be able to obtain a better return on your money through a term deposit. Term deposits, especially those offered by the big lenders look quite attractive right now, but before you lock away your money, it is advisable to shop around for the best interest rate which is not always offered by the big lender.

Shop around for the best rate

For example, a two-year term deposit of $5,000 with Westpac will deliver 2.40% which would earn $260 in interest. The market leader however is Greater Bank which offers a rate of 3.00% and would earn you $300 on the same deposit. It is very tempting to stick your cash with a big bank because they advertise heavily and have the biggest network, but that doesn’t mean you will always get the best bang for your buck so make sure you shop around.

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