Term deposit rates leave savers scraping at the bottom of the barrel
Only nine months ago, the average 2 year term deposit rate offered by the big banks was 3.13%, fast forward to present day and for the same term savers are facing a return of just 2.48%.
"What these numbers show us is savers are barely getting past inflation if they are stashing their cash in an average term deposit account offered by the majors,” explained Mozo’s Product Data Manager, Peter Marshall.
“In a low rate market, savers really need to do their homework to ensure they’re getting the best return on their money.”
He added that despite longer term deposits traditionally being more valuable to banks compared to shorter terms, consumers have been left with few incentives to store their cash away at all.
Which providers have slashed rates?
According to the Mozo database, 19 providers reduced term deposit (TD) rates last month, compared to 14 providers lifting TD rates by only marginal increments.
Westpac and its sister banks including St.George hit savers with the biggest rate cuts in May at 60bp with their 3 year terms. Greater Bank also slashed the value of its term deposits, reducing its 2, 3, 4 and 5 year rates by 20 basis points.
Among the providers who dropped term deposit rates last month, 68% reduced TD rates under one year, which may indicate that banks are attempting to steer savers away from shorter term deposits.
While Marshall doesn’t expect providers will pump up TD rates to lucrative levels soon, he urged Aussies to shop around when looking for a bargain.
“Despite the fact that we’re seeing term deposit rates trending down overall, savers do have the opportunity to nab tempting rates from non major banks and credit unions up to 3.20% for a two year rate.”