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Source: AAP
All of the Big Four banks have begun to decrease their term deposit rates in anticipation of the Reserve Bank of Australia’s (RBA) cash rate decision this week. This trend highlights the “double-edged sword” of the expected rate cut, indicating to savers that the opportunity to secure higher returns is limited.
According to Canstar research, over 20 banks have lowered at least one term deposit rate in the past fortnight, including the major banks. Westpac has reduced its 11-month special rate by 0.05 percent, now standing at 4.60 percent.
ANZ has decreased its advanced notice term deposits by as much as 0.20 percent for terms from three to nine months and two years, also adjusting its maximum rate down to 4.60 percent. This follows NAB’s rate cuts of up to 0.20 percent and Commonwealth Bank’s reductions of up to 0.95 percent, accompanied by a few minor increases.
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Sally Tindall, Canstar’s data insights director, remarked that the “flood of term deposit cuts” serves as a reminder that lowering the cash rate can have both advantageous and disadvantageous outcomes.
“Currently, there are still a few banks providing term deposit rates of 5 percent or higher; however, with the RBA likely to cut the cash rate as early as Tuesday, these offers may soon be at risk,” Tindall noted.
“Australians who hold funds in term deposits may experience shock upon maturity when faced with significantly reduced interest rates.
“For those contemplating locking in their hard-earned money in a new term deposit, swift action may be crucial.”
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Mozo money expert Rachel Wastell concurred that anyone thinking about a term deposit should act without delay.
“The Big Four banks are already slashing their term deposit rates in anticipation of the RBA’s possible action,” she informed Yahoo Finance.
“Savers should move quickly if they want to secure better returns before further rate drops occur.”
Canstar has identified just six banks currently offering at least one term deposit at 5 percent or higher:
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6 month term: Australian Military Bank, 5.10 percent
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1-year term: Family First, 5.05 percent
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2-year term: Qudos Bank, 4.70 percent
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3-year term: Judo Bank, Qudos Bank, 4.50 percent
Savings account rates have remained stable since the year’s beginning, with the highest ongoing savings rate still at 5.50 percent from ING, MOVE, BOQ, and ubank.
