Term deposit wars heating up as market-leading rates announced
If you’ve been thinking of putting some money into a term deposit now might be the time, as Teachers Mutual Bank Limited and Gateway Bank have announced increases to their standard term deposit interest rates.
Teachers Mutual Bank Limited have announced a market-leading rate of 3.00% p.a. for a 12-month term deposit of $5000 and above. This rate is inclusive of all Teachers Mutual Bank Limited brands such as Firefighters Mutual Bank and Unibank.
Gateway Bank, on the other hand, are increasing both 9 and 12-month standard term deposit interest rates by up to 50 basis points to 2.65% and 2.85% respectively for balances of $10,000 and above.
“The increased competition is resulting in a bidding war for deposits and we’re now starting to see great new offers for consumers, with these new rates as high as some of the high-interest bonus savings accounts available,” said Mozo Product Data Manager Peter Marshall.
What’s influencing these changes?
Term deposit interest rates move in sync with RBA official cash rates, but outside of this Peter Marshall suggests that these hikes might be as a result of overseas funding costs.
“The cost to banks of obtaining funds from international sources has been steadily increasing over the last year or so which has seen many banks starting to lift term deposit rates- as we’ve seen in the last few months,” he said.
“It’s reasonable to expect the competition for term deposit funds to continue and for more banks to look at improving their rates over the coming months in order to win customers. It’s a good time to be looking at putting your money into a term deposit.”
So how can I get the most from my term deposit?
When looking to put some money away in a term deposit, the first thing you should consider is how far your interest rate will get you.
We compared the best rates with the lowest in our database for a 12 month deposit and used our term deposit calculator to crunch the numbers on what kind of return Aussies can expect from their term deposit.
If you deposited $10,000 for a 12-month term with the current Teachers Mutual Bank market-leading rate of 3.00%, you would earn $300 in interest. If you invested the same amount with a bank offering the lowest rate in our database of 1.50% for the same term, you’d get just $150. That’s half of what you could be earning.