Increased Returns for Savers as Rates Rise Again February 3rd, 2023
Savers received good news as rates paid on savings accounts have been steadily increasing, even with the federal treasurer calling for an ACCC investigation into bank deposit rates.
In light of the rate rise on Tuesday the 7th of February, savers can earn a generous 4.5 percent on a four-month introductory rate with Macquarie's online savings account, as reported by research house canstar.com.au. It's worth noting that this money remains at call, meaning there are no restrictions in accessing the initial deposit or the monthly interest payments. After the four-month period, the rate currently drops back to 3.7 percent, which is still well above many term deposit rates, and the money remains at call.
Competing Online Banks
A number of other banks who mainly operate online have similar, albeit less generous, deals in place, including Bankwest, BOQ, and UBank. However, other conditions may apply, such as age restrictions and the need to make regular deposits to the account.
Term Deposit Options
On the term deposit front, a number of smaller banks, credit unions, and online institutions are offering rates of up to 4 percent per annum for terms up to 10 months. However, there's little benefit in locking your money away for longer, as the rates on offer aren't much higher for terms of one year or longer. You'll get up to 4.35 percent per annum for tying your money up for three years or longer.
Big Banks Slow to Beef Up Deposit Rates
While the major banks might be feeling the treasurer's blow-torch, there's no sign that they are moving quickly to beef up deposit rates. The best you can expect from the Big 4 is 3 percent per annum for a 10-month term deposit with CBA or Westpac.
Government-Backed Investments
It's important to remember that all of these deposit type investments are backed by the Federal Government's Financial Claims Scheme, which guarantees the return of up to $250,000 per account holder per institution. The list of "Authorised Deposit-taking Institutions" covered by the scheme is published on apra.gov.au's website and includes all banks, building societies, credit unions, and online banks operating in Australia under an Australian banking license.
Safe Investment Options
With non-bank fixed-interest investments paying similar rates, but with the added risk of losing some or all of your capital, the safety of a bank deposit shouldn't be underestimated. Most fixed-interest investments on-lend your money to property investors, developers, and others, many of whom are based in States where property prices are falling sharply. Loan repayment stress and the underlying liquidity of these funds could become a real issue if you try to cash out your investment when everyone else is trying to do the same thing at the same time. As the small print says, none of your invested capital in this case is guaranteed.