Interest payouts 'were considerably down last year'

The interest paid out by Australia’s major banks on savings accounts and term deposits last year was well down on the figure recorded in 2008, it has been revealed.

Scott Murdoch, a business columnist for the Australian, noted that the interest bill for the four main banks was $39.89 billion last year – a massive drop on the $60.19 billion paid out in 2008.

He said the banks had been the major beneficiaries of official interest rates being slashed during the global financial crisis despite competition breaking out for customer deposits as the majors looked to shore up their retail funding.

"The major saving for the banks occurred even though each of the institutions have argued that a retail deposits war broke out to reduce their reliance on volatile offshore funding markets," observed Mr Murdoch.

This fluid savings marketplace has encouraged more Australians to compare term deposits, particularly as interest rates have risen in recent months. Reserve Bank assistant governor Malcolm Edey recently noted that some banks have been offering "specials" on their term deposits of around six per cent, or about 100 basis points above the bill rate.

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