Where are the best rates across Savings Accounts and Term Deposits

Where are the best rates across Cash Accounts and Term Deposits 💰🏦

The Reserve Bank of Australia has increased interest rates ten consecutive months (or 3500 per cent) over the past 12 months: Though this month it finally “paused” at 3.6 per cent.

For anyone trying to make money from cash or income yielding investments this means the tide has well and truly turned.

Rather than the previous problem of having to search far and wide for any potential investment that could generate a decent cash return, all savers and retirees now face the predicament of having a wide range of options available to them that offer attractive rates of interest.

But as always, the devil is in the details. As the investment return increases, so does the risk: As a result finding a sweet spot between a good rate of interest with an acceptable level of risk is key.

The safest option is to hold cash in $250,000 lots across authorised deposit taking institutions, which is the technical term for Australian banks, building societies and credit unions. As a legacy from the 2007 global financial crisis, the federal government still offers what is known as the Financial Claims Scheme (FCS).

Effectively, the government guarantees your deposits up to $250,000 in the event of a bank failure. Term deposits, high interest cash accounts and transactional cash accounts are all covered in this scheme.

However, there are some nuances such as the bank account must be held in Australian dollars and some branches of foreign banks are not covered.

And while most banks have passed on the rate hikes in full to homeowners, deposit rates have failed to rise by as much.

In terms of the cash options available within a bank, an everyday bank account will earn the lowest rate of interest of up to 1 per cent per year.

Term deposits will earn approximately 4 per cent interest per annum for three months and up to 4.5 per cent for six to 12 months. Interestingly, “high interest” online cash accounts offered by banks also pay interest between 3.5 per cent to 4.5 per cent, but have the additional benefit of “no lock in” time frames compared with term deposits.

Let’s compare the most competitive savings accounts versus term deposits in Australia.

How do the savings accounts stack up?

Just 24 savings accounts – out of a list of up to 300 offerings – meet RBA governor Philip Lowe’s sniff test on reasonable returns, an analysis by research and comparison group RateCity.com.au shows.

Westpac is the only big four bank to feature on the list with its Spend&Save account offer of 4.7 per cent, but only for those aged from 18-24 years.

Of the two dozen offerings from 19 banks, 15 accounts are targeted at all adults, five are for young adults only and four for kids.

At the Press Club event, in response to a question on Australians continuing to hoard $100 bills, Dr Lowe said the rate of circulation had dropped, partly due to higher interest rates, but also signalled lower deposit rates were to blame.

“If people get 4.5 per cent on their transaction deposit – and if you are not getting it, I encourage you to look around for a bank that will give that to you – that incentive of holding $100 bills at home, under your bed, is less,” he said.

How do savings account rates compare to term deposit rates?

Like a term deposit, a savings account also allows you to earn interest on your money. However unlike a term deposit, you can access the money in your savings account whenever you need. You will usually need to meet a monthly deposit condition to earn the full interest rate on your savings account, which can act as a good incentive to keep growing your balance and building your savings.

Savings account rates have been going up quickly over the past few months, with several accounts now offering 4% p.a. or higher.

Savings accounts with rates of 4.5 per cent or above

For older Australians we’ve found the below bank savings accounts currently offer the highest rates in Australia (as at 6 April 2023)

ING – Savings Maximiser @ 5.00%
Conditions: Deposit $1,000+ into a linked bank account, make 5+ purchases /mth, grow savings balance each mth
Balance cap for max rate: $100,000

MOVE Bank – Growth Saver @ 5.00%
Conditions: Deposit $200+ and make no withdrawals
Balance cap for max rate: $25,000

Virgin Money – Boost Saver @ 4.85%
Conditions: Deposit $2000+ into a linked bank account (less for under 25s) and make 5+ purchases /mth. Provide 32 days’ notice to withdraw.
Balance cap for max rate: $250,000

Great Southern Bank – Home Saver @ 4.75%
Conditions: Deposit $2,000+ into linked bank account and make 5+ purchases / mth
Balance cap for max rate: $100,000

Bank of Queensland – Smart Saver @ 4.60%
Conditions: Ages over 35. Deposit $1,000+ into linked account and make 5+ purchases / mth
Balance cap for max rate: $250,000

ubank – Save @ 4.60%
Conditions: Deposit $200+ every month into any linked account
Balance cap for max rate: $250,000

Great Southern Bank – Advantage Saver @ 4.60%
Conditions: Grow the balance by $250 each month
Balance cap for max rate: $100,000 – $750,000

St.George – Incentive Saver @ 4.50%
Conditions: Deposit $50+ /mth (less for under 21s) . Extra 0.10% for 3 mths if opening online
Balance cap for max rate: N/A

Bank of Melbourne – Incentive Saver @ 4.50%
Conditions: Deposit $50+ /mth. Extra 0.10% for 3 mths if opening online
Balance cap for max rate: N/A

BankSA – Incentive Saver @ 4.50%
Conditions: Deposit $50+ /mth. Extra 0.10% for 3 mths if opening online
Balance cap for max rate: N/A

MyState Bank – Bonus Saver @ 4.50%
Conditions: Deposit $20+ /mth into savings account and 5+ purchases on linked bank account
Balance cap for max rate: $250,000

First Option Bank – Savings+Bonus @ 4.50%
Conditions: Deposit $100+ / mth and no withdrawals
Balance cap for max rate: $250,000

G&C Mutual Bank – Bonus Saver @ 4.50%
Conditions: Deposit $100+ / mth and no withdrawals
Balance cap for max rate: N/A

RACQ Bank – Bonus Saver @ 4.50%
Conditions: Deposit $100+ / mth and no withdrawals
Balance cap for max rate: $99,999

People’s Choice – Dream Fund @ 4.50%
Conditions: Grow balance each month
Balance cap for max rate: N/A

Ratecity.com.au research director Sally Tindall said after 10 RBA hikes, many savings accounts are “still trailing a long way behind”.

Big four online saver accounts still have ongoing rates ranging from 1.10 per cent to 1.85 per cent.

“Governor Lowe has set a very reasonable savings benchmark, yet the vast majority of accounts aren’t even close to clearing this.

“Just one account from a big four bank passes Governor Lowe’s savings rate sniff test, while many of the others aren’t even within cooee of it,” Ms Tindall said.

“There are millions of big four bank online savings customers out there earning less than 2 per cent on their nest eggs. That’s nowhere near good enough,” she said.

Term deposits – Where to find the most competitive rates this month?

Based on Finder’s website, below are their best 3 term deposits over 3, 6 and 12 months for the month of April.

Best 3-month term deposit rates

• 4.1% p.a. Firstmac
• 4.2% p.a. Bank of Sydney
• 4% p.a. Bank First

Best 6-month term deposit rates

• 4.5% p.a. Gateway Bank
• 4.45% p.a. Firstmac
• 4.55% p.a. Bank of Sydney

Best 12-month term deposit rates

• 4.70% p.a. Gateway Bank
• 4.65% p.a. AMP Bank
• 4.65% p.a. AMP Bank

Between 12 months to 5 years?
If you’re looking to put your money in a term deposit for a longer period, Mozo says Judo Bank is the current TD leader across all terms lengths, with all of its 1-4 year terms starting with a ‘4’, and its 5-year rate at a whopping 5.00%.

Here are Judo’s rates below as of 1 April:

• 4.60% p.a. for a 1-year term
• 4.85% p.a. for a 2-year term
• 4.90% p.a. for a 3-year term
• 4.90% p.a. for a 4-year term
• 5.00% p.a. for a 5-year term

Mozo’s banking expert Peter Marshall says if you’ve been debating about getting a term deposit for the next year or so, you shouldn’t leave it for too long.

Also, competition is slowing down in the space as we’ve seen several big players begin to decrease rates on their long-term deposits. Some have now made shorter terms more competitive.

Once you have your shortlist, another good practise is to work out the actual amount earned at the maturity date of each term deposit. Because moving your money out of one bank and into another can be arduous, and in the end it may only earn you an extra $50 over the period.

Before deciding on a term deposit, please be mindful that other providers are offering similar rates so it’s always a good to idea to research your options and compare rates, features and terms and conditions, and to consider seeking the advice of a suitably qualified professional. For example, other competitive bank rates 12 months and longer based on Canstar’s website:

12-months

• 4.75% p.a. at Orange Credit Union
• 4.65% p.a. at AMP Bank
• 4.60% p.a. at Firstmac
• 4.60% p.a. at ING
• 4.60% p.a. at Judo Bank
• 4.60% p.a. at Macquarie Bank

24-months

• 4.85% p.a. at Judo Bank
• 4.65% p.a. at G&C Mutual Bank
• 4.60% p.a. at AMP Bank
• 4.60% p.a. at ING
• 4.50% p.a. at BankVic
• 4.50% p.a. at Orange Credit Union

5-years

• 5.00% p.a. at Judo Bank
• 4.70% p.a. at AMP Bank
• 4.50% p.a. at BankVic
• 4.50% p.a. at G&C Mutual Bank
• 4.40%* p.a. at Citi

Term deposits for $100k+

If you’re got a large balance of $100,000 or more, make sure you look for a term deposit that can be opened for larger balances. Some term deposits are only for smaller deposits of $10,000, $25,000 or $50,000 max.

Here are a few of the best 12-month term deposit rates for balances over $100,000:

• 4.65% with AMP Bank
• 4.6% with ING
• 4.6% with Judo Bank

Pros and cons of term deposits

Is money safe in a term deposit?

All term deposits (listed on this page) are covered under the Australian government’s financial claims guarantee scheme. This scheme provides protection for deposits up to $250,000 with authorised deposit-taking institutions (ADIs), such as your bank, mutual bank or credit union, in the event that the ADI fails.

However, please be careful of unfamiliar businesses advertising extremley high returns as these are often unsecured with no government gaurantee, or are fraudulent. As they say, if it’s “too good to be true”…

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