If you were hoping for a dramatic change in term deposits, then you’ll be sorely disappointed. Around 70 of the 86 financial providers Mozo tracks dropped interest rates in July and our experts predict cuts will continue throughout August. What you might be surprised to hear is that even after all that, there are still perks to locking your money away in a term.
Shorter terms hit harder
As of this month, no term now has an average interest higher than 1.00% p.a. In fact, with all the cuts throughout July, the average interest rate for one-year terms fell 11 basis points. The average interest rate for each term has fallen between 43 and 62 basis points since the beginning of 2020, with shorter terms falling the most**.
So many changes took place in July and market-leading rates fell down the Mozo table. This left the top spots open for other providers to nab. An example of this is Judo Bank. Ever since it came onto the scene last year, Judo Bank’s longer terms have consistently been in Mozo’s top spots. However, it wasn’t until MOVE Bank cut rates for its three and six month term deposits that Judo rose to the top for shorter terms.
Look beyond the big banks
One thing Mozo’s Banking Expert Peter Marshall had to say is look beyond the big banks.
Right now term deposit rates with the big four are all below 1.00% p.a. Let’s take one-year terms as an example. The highest rate you can currently get with the big four is 0.80% p.a., while the most competitive rate is 1.40% p.a. with Judo Bank**.
So, as you can see, when it comes to term deposits, it might just pay to expand your horizons beyond the biggest names in the biz.
Perks of a term deposit in 2020
While it may all seem fairly doom and gloom for term deposits, Marshall says there are still some very valid reasons for putting your money in one.
“We are still seeing interest rates for savings accounts fall. So while savings rates may be better than some term deposits right now, that may not last for the next year,” he said.
Marshall said that there is every possibility that savings rates will continue to fall. “What looks like a terrible term deposit interest rate now, might be better than the best savings rate in a year’s time.”
That’s the thing about term deposits, the interest rates are fixed. So, if you lock your money away now, depending on how long a term you opt for, in three, six or even one year’s time, your interest rate will be the same.
Feeling curious to find out more? Head to Mozo’s compare term deposits page or have a gander at the one year terms on offer below.
Compare one year term deposits - last updated December 05, 2020
- AMP Bank
Term DepositAMP Bank
- MyState Bank
Online Term DepositMyState Bank
Online Term DepositDetails
**Interest rates and statistics taken from information available in the Mozo database, correct as of 1 August 2020.
^See information about the Mozo Experts Choice Term Deposits Awards
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