Which banks have increased term deposit interest rates?

This month’s Reserve Bank of Australia (RBA) board meeting saw the official cash rate rise for the first time in over a decade. But while interest rate rises may mean one thing to mortgage holders, they may be much more appealing to long-term savers.

In response to the RBA increasing the official cash rate 25 basis points from 0.10% to 0.35%, several banks have announced increases to their term deposit rates, including the following.

Increases to term deposit rates following May 2022 RBA cash rate rise

Source: RateCity.com.au. Data accurate at time of publishing, 10/05/2022.

Additionally, MyState Bank announced an increase to a number of term deposit rates from 19 May, while Newcastle Permanent announced an increase of 0.60% on selected term deposit offers from 18 May. Both banks are yet to disclose further details. 

Meanwhile, Bendigo and Adelaide Bank has also announced it is increasing rates for certain deposit products including their Reward Saver account but has not made specific mention of whether this will include term deposits.

Should you consider a term deposit over a savings account?

At the time of writing, just eight lenders have announced rate increases for savings accounts following the cash rate hike, including three of the big four banks – Westpac, NAB and ANZ. 

CommBank neglected to lift savings account rates, instead announcing its special offer 18-month term deposit at a competitive rate.

One week on from the cash rate announcement, there’s still time for other lenders to make a move on savings rates, but there’s no guarantee.

If you’re wondering whether to opt for a term deposit over a savings account to grow your nest egg, it’s worth weighing up the pros and cons of a term deposit account.

Term deposit pros and cons

Pros:

• Often offers more competitive interest rates than savings accounts.
• Keeps your money locked away, reducing the temptation to dip into it when you’re short on funds.
• Relatively low risk, potentially offering a safer alternative to other investment options.

Cons:

• Access to your money is restricted until the end of the term, which means you can’t withdraw it if you really need it – unless you want to cop a penalty fee.
• You can’t add to your initial deposit, so you if you’ve got extra savings, you’ll need to find another place for them to accrue interest.
• Less flexible than a savings account.

Deciding between a term deposit and a savings account will ultimately depend on your personal savings goals and individual needs.

To compare what’s available, consider using RateCity’s term deposit comparison table and savings account comparison table.

Compare term deposits