November 26, 2010
While the average interest rate for six- and 12-month term deposits increased slightly, the major four banks remain motionless, but you can find a better deal by shopping around.
Big four versus other lenders
According to RateCity from November 1 until November 22, the benchmark (the average of the major four banks) six-month deposits remained stagnant at 4.86 percent and 5.98 percent for 12-month terms. ANZ had the highest rate out of the majors at 6 percent for six months, while Westpac had the highest 12-month term at 6.05 percent.
During the same period, however, average rates across 100 institutions monitored by RateCity increased for both accounts. Six-month terms increased only slightly by one basis point from 5.53 to 5.54 percent while the average for a 12-month term increased by five basis points, from 5.89 to 5.94 percent.
Even though these movements for six-month and one-year term deposits are only small, it may stimulate some competition between financial institutions and hopefully the major four banks to lift their term deposit rates further. Average rates are just that, so savvy investors should take to the internet and compare term deposits before making a decision on where to stash their cash.
Shop around for the best deals
If you are in the market for a term deposit, you may be able to find a better deal by shopping around and see what other lenders are offering.
For instance, the highest advertised six-month term deposit rate currently listed on RateCity is at 6.45 percent by Laiki Bank (as at November 25). That's 91 basis points higher than the average for a six-month term.
If you were to deposit $10,000 into this account, at maturity you could earn yourself $322.50 which is about $80 more than the highest rate offered by the major four banks (ANZ at 4.86 percent at the time of writing) or about $50 more than the average rate (5.54 percent).
The highest one-year term deposit account listed on RateCity is at 6.61 percent by UBank and at maturity you could earn more than $330 with a $10,000 deposit, compared to just over $300 with the highest rate offered by the major four banks (NAB at 6.05 percent).
Just remember that before your account reaches maturity you must notify your lender of what you want to do with your money otherwise it may automatically roll over, usually at a lower rate than what you originally agreed to.
When term deposit rates are on the move, you should compare term deposit rates online to find a deal that can earn you more and make your money work harder for you.