Beat the clock: Lock in higher term deposit rates before the May RBA decision

By Peter Terlato · · 2 min read
Fact Checked
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With the Reserve Bank of Australia (RBA) widely expected to deliver another interest rate cut on 20 May, time is running out for savers to lock in higher term deposit rates before they slip further.

Banks have already started winding back their offers in anticipation of the coming cut, and the signs are hard to ignore. Westpac, for example, just trimmed its 11-month special offer term deposit rate by 10 basis points to 4.10% p.a. But customers can still score a slight bump – up to 4.20% p.a. – when opening or renewing their account via the Westpac app or online banking.

It’s a move that reflects a broader trend. Over the past few months, term deposit rates have been edging lower, both before and after the RBA’s February rate cut. And with another cut on the cards this month, those downward adjustments may only accelerate.

Still, not every institution is moving in lockstep with the Big Four. Several smaller banks and digital challengers are offering market-leading returns for those who act quickly. Judo Bank, for instance, is advertising rates as high as 4.70% p.a. for 3-month terms, while other providers are still offering rates above 4.50% for short- to medium-term deposits.

That’s significant because shorter-term options could be especially appealing right now. They offer the opportunity to lock in a decent rate before the next cut, while retaining the flexibility to reassess your strategy later in the year – especially if the RBA continues to ease.

What savers can do now

If you’re facing shrinking returns, there are other options to explore:

  • Employ unique strategies: Term deposit laddering allows you to split your money across different terms to balance access and better rates.
  • Switch to savings: Some high-interest savings accounts still offer competitive rates, especially if bonus conditions are met.
  • Compare rates regularly: With banks adjusting offers quickly, checking interest rates could help you lock in a better deal.