Australia: Term deposit interest rates increase

In August 2016 the big four banks increased interest rates on term deposits in an attempt to pacify outrage that the Reserve Bank interest rate cuts were not passed on. Each of the big four banks increased the interest rates on a range of different products. Westpac, for example, increased interest rates on a range of products all by 50 basis points.

While CBA and ANZ increased their one-year term deposits by 60 and 50 basis points respectively. NAB, took a slightly approach to the other big four banks, by announcing an 85 basis point increase to its eight-month term deposit.

While interest rates are important to savers it appears that these special rates offered by the big four banks did not drive uptake as there has been has been little change in the last 2 years. RFi Group data shows that the proportion of Australians who hold term deposits has fallen by 4% in the last 2 years to 16%. Now a year has passed since these rates were announced banks are again expected to gain as the term deposits expire.

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