Savers miss out on thousands as banks slash term deposit rates

Rachel WastellAug 16, 2019( 3 min read )

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.

Rachel WastellBusiness Finance Writer

Rachel Wastell is an award-winning writer with a knack for translating complicated subjects. She is a strong environmental advocate, and is as passionate about the planet as she is about finance and open education. Writing professionally for almost ten years, Rachel's work has been published across the Australian media landscape including the Australian Financial Review and The Guardian, and she regularly contributes to Business Insider and Lifehacker.

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Today's top term deposits products

Term Deposit

Interest rate

Min. deposit

1.70%

p.a for 3 months

$1,000

Next rate increased

Max rate

1.70%

p.a for 3 months

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When your term deposit matures, roll over your full deposit amount (or more) for another term and receive a Loyalty Bonus of 0.10% p.a. on top of the current standard interest rate

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Term Deposit

Interest rate

Min. deposit

1.25%

p.a for 3 months

$1,000

Next rate increased

Max rate

1.40%

p.a for 12 months

1.45%

p.a for 3 months

Covered by government guarantee
Interest can be paid to other institution

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Term Deposit ($250k+)

Interest rate

Min. deposit

1.80%

p.a for 3 months

$250,000

Next rate increased

Max rate

1.80%

p.a for 3 months

Covered by government guarantee

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Personal Term Deposit

Interest rate

Min. deposit

1.90%

p.a for 6 months

$1,000

Next rate increased

Max rate

1.95%

p.a for 9 months

2.40%

p.a for 60 months

special

Loyalty Bonus - Roll over your principal after it reaches maturity to another Term Deposit and receive an additional 0.10% bonus on top of our standard Term Deposit for the new term

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FAQs

A fixed term deposit is a safe and stable way to earn a fixed return on your cash investment.

Fixed term deposits are essentially bank accounts where you lock your money away for a fixed period and earn a fixed interest rate on those funds.

Fixed term deposits can be both short term, which is usually anything under 12 months, or long term, which can be up to 10 years.

Once the fixed term has ended, the bank or financial institution will give you back your initial deposit plus any interest you earn during the fixed term period.

Depending on the type of fixed term deposit account you open, when the term matures, you may have the option of rolling the funds over for a new term or withdrawing the funds.

Unlike other savings or transaction accounts which offer variable interest rates and flexible features, fixed term deposits offer fixed interest rates, which means the amount of interest you earn will remain the same during the term of the deposit.

Savers miss out on thousands as banks slash term deposit rates

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Today's top term deposits productsSelected based on performance and popularity on our site. RateCity may receive remuneration for referrals to these links and/or as a consequence of a consumer acquiring a product after following these links.

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