The evolution of term deposits.

Thursday 02 May 2013

Article by Mozo

With Australians fixated on savings, term deposits no longer as attractive as they once were and new post GFC rules on the banks, Aussies are bearing witness to an evolution in the way they save.

Piggy bank choosing between term deposits or savings accounts.

Back in March 2013, Mozo blogged on the arrival of the RaboDirect Notice Saver, a part savings account, part term deposit, hybrid of accounts. The new account had found a hole in the savings market, offering Australians the best of both worlds. 

And now it seems that RaboDircet have ushered in the era of notice accounts, with a number of banks following their lead, such as the Westpac's Evergreen account. Managed by the bank's institutional division, targeting corporate and high net worth individuals. Westpac's head of corporate cash management Daniel Moses describes the Westpac Evergreen as a revolving term deposit that gives customers access to high interest rates and with more flexibility to manage their funds.

Similarly is Investec's Liberty 32 Day Notice account, although only offering one notice period, Investec's Shehan Rajakumar says customers like the fact that returns are similar to term deposit rates and they can make deposits at any time.

According to the News Limited Network, the emergence of notice period accounts is an example of changes to banking regulations effecting product design. Known as Basel III, the rule to take effect in 2015, requires authorised deposit takers to maintain enough liquid assets to transfer into cash if necessary, for up to 30 days, should another 2008 GFC market plummet occur.

Savers can compare new notice accounts against traditional term deposits and savings accounts at Mozo.

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