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Savers miss out on thousands as banks slash term deposit rates

Savers miss out on thousands as banks slash term deposit rates

CBA, Westpac, NAB and ANZ have cut term deposits this week as savers feel the sting of falling interest rates.

  • CBA cut TD rates by up to 0.45%
  • Westpac cut some TD rates by 0.20%
  • NAB cut some TD rates by 0.10%
  • ANZ cut TD rates by up to 0.20%

Analysis of the big four banks from RateCity.com.au shows that compared to March this year, term deposit rates are now up to 1.30 per cent lower.

1-year term deposit rate changes

Mar-07

Aug-16

Difference

CBA

2.20%

1.50%

0.70%

Westpac

2.30%

1.55%

0.75%

NAB

2.40%

1.75%

0.65%

ANZ

2.30%

1.70%

0.60%

3-year term deposit rate changes

Mar-07

Aug-16

Difference

CBA

2.30%

1.45%

0.85%

Westpac

2.50%

1.50%

1.00%

NAB

2.50%

1.65%

0.85%

ANZ

2.50%

1.65%

0.85%

5-year term deposit rate changes

Mar-07

Aug-16

Difference

CBA

2.40%

1.50%

0.90%

Westpac

2.80%

1.50%

1.30%

NAB

2.70%

1.75%

0.95%

ANZ

2.80%

1.70%

1.10%

Notes: Rates based on $20K balance

If you put $20,000 into a 5-year term deposit with Westpac in March, you would earn a total of $2,800 in interest at maturity. However, if you put that same amount into the 5-year term deposit today, you’d earn $1,500 in interest, that’s $1,300 less.

RateCity.com.au research director Sally Tindall said these cuts are particularly tough on savers who rely on the interest they earn from term deposits.

“The banks keep chipping away at term deposit rates on the back of increasing expectations the cash rate will keep falling towards zero. This may force some Australians to seek out more risky investment options.

“With low interest rates and a sluggish economy, it’s unlikely we’ll see term deposit rates turn around anytime soon,” she said.

Interest earned on 1-year $20,000 term deposits

Mar-07

Aug-16

Difference

CBA

$440

$300

$140

Westpac

$460

$310

$150

NAB

$480

$350

$130

ANZ

$460

$340

$120

Interest earned on 3-year $20,000 term deposits

Mar-07

Aug-16

Difference

CBA

$1,380

$870

$510

Westpac

$1,500

$900

$600

NAB

$1,500

$990

$510

ANZ

$1,500

$990

$510

Interest earned on 5-year term deposits

Mar-07

Aug-16

Difference

CBA

$2,400

$1,500

$900

Westpac

$2,800

$1,500

$1,300

NAB

$2,700

$1,750

$950

ANZ

$2,800

$1,700

$1,100

Notes: Rates based on $20K balance. Interest earned annually and paid at maturity.

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This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

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