Savers miss out on thousands as banks slash term deposit rates

Rachel WastellAug 16, 2019( 3 min read )

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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 Wastell

Business 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.

Today's top term deposits products

Term Deposit

Real Time Rating™

Interest rate

Min. deposit

0.65%

p.a for 6 months

$50,000

Next rate increased

Max rate

0.70%

p.a for 7 months

1.00%

p.a for 36 months

Covered by government guarantee

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Term Deposit

Real Time Rating™

Interest rate

Min. deposit

0.70%

p.a for 6 months

$50,000

Next rate increased

Max rate

0.90%

p.a for 5 months

1.00%

p.a for 12 months

Covered by government guarantee

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Term Deposit

Real Time Rating™

Interest rate

Min. deposit

0.90%

p.a for 6 months

$5,000

Next rate increased

Max rate

1.00%

p.a for 12 months

1.00%

p.a for 12 months

Covered by government guarantee

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Term Deposits

Real Time Rating™

Interest rate

Min. deposit

0.75%

p.a for 6 months

$50,000

Next rate increased

Max rate

1.00%

p.a for 5 months

1.00%

p.a for 5 months

Covered by government guarantee
Interest can be paid to other institution

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FAQs

A term deposit refers to when you lock your money in an account for a certain period of time and at a specified interest rate. You will not be able to access your money for the length of the agreed term without incurring a penalty fee.

A long term deposit generally refers to a term deposit that lasts for more than 12 months – which in some cases may be as long as 10 years.

Usually, the longer you store your money, the better the interest rate you’ll get, so a long term deposit will tend to pay higher interest than a short term deposit.

At the end of the term, you can roll over the money (plus the interest you’ve made during the term), or you can withdraw it all.

Savers miss out on thousands as banks slash term deposit rates

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Savings surprise: Why some term deposit rates are on the rise

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