December 9, 2010
Have you been with your bank for years and are looking to invest the money you have saved up into a term deposit? Typically your current bank will be the first point of call, mainly due to the fact that you are loyal and believe your bank will automatically offer the best rates but this is not necessarily true.
Most major four rates haven't moved
For instance, RateCity discovered that in November the major four banks - ANZ, Commonwealth Bank, NAB and Westpac - did not move their rates for most terms (30, 60, 90, 270 days and one, two, three, four and five years). The only exception was for six months, when NAB was the only bank to increase its rate by 200 basis points to 6 percent.
Meanwhile during the same timeframe the average rates across more than 100 financial institutions monitored by RateCity increased slightly. The largest increase was by 11 basis points for 270-day term, where the average rate increased from 4.91 percent to 5.02 percent.
Earn more by shopping around
If you are considering investing your hard-earned money into a term deposit, shop around to see what rates other lenders are offering as your bank, especially the major four, may not necessarily give you the best rate.
For instance, RateCity discovered that the current benchmark rate (average of the major four) for 30-day term deposits is 2.85 percent, while the average of more than 100 lenders is 3.59 percent. The highest rate offered on RateCity, however, is 5.5 percent (as of Novermber 29, 2010) with SGE Credit union, which is almost double the average of the major four (current as at November 29, 2010). If you deposited $10,000 into this account you could earn $22 more in interest compared to what you would with the benchmark rate of 2.85 percent.
RateCity also found that there was almost 4 percent difference between the highest and lowest rates offered for all terms on RateCity. RateCity's CEO, Damian Smith, says that this could be the difference between hundreds or thousands of dollars.
"Regardless of how loyal you are," Smith says, "try not to rely on the major four banks for the best deals every time. Shop around and compare term deposits using financial comparison websites like RateCity. You may be surprised at what rates are out there, not only with term deposits but with a range of other products too."