Banks offer high interest savings rates

Banks are competing for customer deposits by offering high interest savings rates and high term deposit interest rates.

In order to secure retail funding lenders are pricing deposits above the Reserve Bank’s cash rate, News Limited has found.

It means that customers are being encouraged to compare term deposits. UBank, backed by NAB, is offering a 6.81 per cent rate on a $25,000 term deposit for 12 months. Both Queensland Teachers’ Credit Union and Westpac are offering a rate of 6.8 per cent, the news provider said.

Now is also a good time to compare savings accounts with UBank offering 5.46 per cent for its online savings, compared with ING Direct, at 4.25 per cent.

Tony Meredith, executive manager of deposits at Suncorp, told the newspaper: "Term deposits give people a guaranteed rate with their cash on deposit. The more the RBA keeps raising the cash rate, then more increases to rates will come but by locking in at 6.8 per cent now you can get a big differential over the cash rate instead of waiting to see if they move again in February."

Last week, Steve James, chief executive of Teachers Credit Union, told the Sheet that the group was passing on the benefits of its lower funding costs to bank customers by offering a rate of 7.05 per cent for three years on high interest savings accounts and term deposits.

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