Having cash stashed in the bank can feel reassuring in these tough economic times.
If you’re a saver who’s built a kitty over a considerable amount of time, you may be looking to protect your precious savings during the recession.
One option is to consider term deposit accounts, which generally provide secure returns on a lump sum over a set period.
The downside to term deposits is that you’ll typically be penalised for accessing your funds during the term deposit period. So, if you were to lose your job or if you urgently needed to use your money while it’s still tied to your term deposit, the bank will likely charge you a break fee to end your term deposit early and take the funds out.
You may also not be able to pocket the full interest you’d be eligible for had you not withdrawn your term deposit. It’s always a good idea to understand a term deposit’s break fees, interest reductions and other terms and conditions before committing to the product.
Another drawback to term deposits is that interest rates have been in decline in recent times, with 87 banks and credit unions cutting interest rates across some 3,600 term deposits in the past three months, a RateCity analysis found.
The average rate for a one-year term deposit has decreased by 0.85 per cent in the past 12 months.
And if you thought a longer term deposit might nab you a higher rate, think again. The average rates for three-year and five-year term deposit fell by 0.94 per cent and 0.92 per cent respectively in the past 12 months.
If you’ve considered the pros and cons of term deposits and would still prefer to avoid risky investments, RateCity has put together some of the top-rated term deposits for June 2020, based on RateCity’s Real Time Ratings.
(Rankings are correct at the time of publishing. Please note lenders may trade places on the list as interest rates and fees change and RateCity’s tracker reflects these movements.)
Best one-year term deposits
Best three-year term deposits
Best five-year term deposits