Keeping track of your savings is important, so we've displayed some of the historical term deposits from the big banks.
With high fixed interest rates and no need for maintenance, a term deposit could be a great option if you want to get the most out of your money. The only way we can move forward is to learn from the past. Looking at historical term deposit rates can help you to make a more educated choice when sorting out what term deposit will be right for you. By comparing current term deposit rates with historical term deposit rates, you’ll have the ability to make a better informed judgment, ensuring you won’t make the same mistakes others have made in the past.
Historical term deposit rates
National Australia Bank (NAB)
Here are some of the term deposit rates NAB had from 2011 through to 2014.
|Date||6 months||12 months||2 years|
Australian New Zealand Bank (ANZ)
|Date||3 months||12 months||3 years|
|6/8/11||5.60% p.a.||6.00% p.a.||6.20% p.a.|
|20/3/12||5.30% p.a.||5.00% p.a.||5.30% p.a.|
|10/10/13||2.50% p.a.||N/A||3.30% p.a.|
|25/4/14||2.50% p.a.||N/A||3.30% p.a.|
Unfortunately our records only go back to the beginning of 2014.
|($5,000 to <$10,000)||3 months||12 months||3 years|
|19/7/14||2.50% p.a.||3.30% p.a.||3.70% p.a.|
Commonwealth Bank of Australia
|$10,000 - $49,999||2 months||12 months||5 years|
|15/12/12||4.20% p.a.||4.25% p.a.||4.50% p.a.|
|3 months||12 months||5 years|
|22/5/2013||3.90% p.a.||3.95% p.a.||4.50% p.a.|
|$10,000<$20,000||6 months||12 months||5 years|
|21/9/2011||3.29% p.a.||3.95% p.a.||3.94% p.a.|
|5/1/2012||2.64% p.a.||2.90% p.a.||2.71% p.a.|
|26/4/2013||1.05% p.a.||1.55% p.a.||1.64% p.a.|
What can we learn from looking at historial interest rates?
Looking at historical term deposit rates can help you to assess whether the current economy is favourable for you to open an account. There are many lessons we can take on board from the past, such as:
- Rates will constantly change. The financial market is constantly changing and interest rates do not remain the same. The economy works in a cycle, and with any bank account, interest rates will swing up or down depending where the economy is in that cycle. When choosing a term deposit, look at the current economic situation to determine whether the interest rates are rising or falling.
- Lenders will offer different options. Features and options of term deposit accounts will vary from lender to lender. Some banks now allow you to increase the interest rate during the term if the interest rates of the lender have increased. Other lenders may also give you the opportunity to access your funds before the account reaches maturity. Make sure you check with your lender if any of these flexible options will incur any fees.
- Interest rates should always be competitive. Since the GFC, interest rates should always be quite competitive, as most banks now get a substantial amount of funds from term deposits. If there are large differences in the interest rates you are comparing, make sure the interest rate is not just an introductory offer that may be lowered after a certain time period.
Compare current term deposit interest ratesRates last updated January 24th, 2015
Compare current business term deposit interest ratesRates last updated January 24th, 2015
History of Term Deposits
Term deposits have changed quite significantly when compared to their counterparts from the past. There have been some major changes in the modern financial market. Some changes include:
- Banks previously did not have competitive interest rates. Historically, banks relied on wholesale bond markets to secure their funds. This meant that there was not an emphasis on gaining and retaining funds from term deposits. Because the banks were not focused on term deposits, the market was nowhere near as competitive as it is today. Now, banks give extremely competitive interest rates, as much of their funds stem from customers investing their money in term deposit accounts.
- The Global Financial Crisis changed interest rates. After the impact of the GFC on the Australian economy, the Australian government employed a ‘deposit guarantee’ of up to $1 million, in the event that an Australian bank could not meet its commitments. In return for this security, banks can now offer higher term deposit interest rates to their customers.
- Investors did not always have security. This ‘deposit guarantee’ gave individuals throughout Australia a peace of mind that no one had before. Investors had complete security in terms of their accounts, and so more people began to take interest in opening their own term deposits.
- Smaller lenders were not as competitive. Regional banks, building societies and credit unions got much of their funding through securitisation markets. This meant they did not offer competitive term deposit rates, as they did not rely on these accounts to maintain their funds.
How to find the best term deposit for your situation
Before deciding on a term deposit, there are many features you need to consider to make sure you secure the highest rate of return.
- Interest rates. Generally, the interest rate is fixed for the length of the term. Since there are so many term deposit accounts on the market, interest rates will typically be very competitive. However, most banks will have the option of choosing how your interest will be paid. This could be fortnightly, monthly or annually. How your interest rate is paid will change what interest rate your lender will offer you. Looking at historical term deposit rates can help you to make a more informed decision when choosing a lender, and when choosing the terms of how the interest rate will be paid.
- Length of term. Generally, the length of term deposits can range anywhere from a few months to a few years, depending on what the particular bank is offering. The length of the term will affect the interest rate, so don’t just choose the shortest term expecting to get the same interest rate as a long-term deposit account.
- Minimum/maximum balance. Most banks will have a minimum or maximum amount of money you can deposit into the account. This will vary from lender to lender. Make sure the lender you choose can offer you a minimum deposit you will be able to leave untouched for an extended period of time, so that you don’t feel pressured to deposit an amount that you can’t afford.
- Fees and charges. There are generally no ongoing fees or charges associated with term deposits. However, banks will charge hefty fees for early withdrawals. Make sure you deposit an amount you definitely won’t need to withdraw from, or you might lose money, which may cancel out any interest your deposit has earned.
Pros and cons of term deposits
- No maintenance. With high interest savings accounts, you generally have to keep depositing a certain amount of money every month to earn a higher level of interest. With term deposits, once you have deposited your balance you simply let the money sit and collect interest for the duration of the term, without having to deposit any more funds into it.
- Fixed rate. Generally, the interest rate will be fixed for the life of the deposit. This means you will know exactly how much interest will be accrued once the term deposit has reached maturity. This is great for anyone who wants to meet a certain financial goal or who is sticking to a budget.
- No/low ongoing fees and charges. Typically, term deposits do not charge account-keeping fees or ongoing charges.
- No access to funds. Unlike a savings account, term deposits do not allow you to access the funds until the deposit has matured.
- Hefty penalties for early withdrawal. If you desperately need to access the funds in the term deposit, the lender will charge you a high penalty, which may be in the form of cancellation fees or an interest rate penalty. Make sure you only invest an amount of money you know you won’t need for the life of the deposit.
How to apply for a term deposit
Most banks allow you to apply for a term deposit online, and it usually only take five to ten minutes if you already have another account with the same bank. It’s still an easy process if you’re a new customer, you’ll just have to provide a few more details.
To set up most term deposits, you will need to be over 16 years of age, be an Australian resident and have an existing bank account.
The application will ask for your personal details, what bank account you would like to link the term deposit to, the amount of your deposit and the life of the term.