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Canstar reveals which bank and customer-owned institution are offering Outstanding Value for their rates, terms and product features across their term deposit products.
With Australia’s cash rate still sitting at its record low of 0.10% for now, savers looking to grow their money have continued to face an uphill battle so far in 2021. However, the benefits of a term deposit, such as the security of a guaranteed return, mean many Australians continue to consider this option to be a smart choice for where to put their savings.
A recent Westpac consumer sentiment survey of 1,200 adults suggested 29% of Australians consider a bank deposit to be the ‘wisest’ place for their savings, while 19% said they would use spare cash to pay down debt. Just over 12% of the consumers surveyed would invest their savings in shares currently, while 9.5% would opt for real estate.
With the RBA indicating the next cash rate increase could be years away, savers looking to lock their money away for a guaranteed return may like to shop around for an institution that bucks the trend by offering a competitive rate on a term deposit.
In this year’s Term Deposit Awards, Canstar’s researchers assessed 69 term deposit products from 59 providers on our database. They identified the bank and customer-owned institution leading the pack based on their interest rates and features. The two winners were recognised by Canstar’s researchers as offering consistently competitive rates for consumers.
Bank of the Year – Term Deposits: Judo Bank
Once again, Judo Bank has taken out Canstar’s Bank of the Year Award for Term Deposits. It’s Judo’s second year on the bounce to win the Award.
According to Canstar Research, Judo excelled in pricing and offered significantly higher interest rates than the rest of the providers assessed. For example, it was the only provider to offer over 1% interest for the majority of its terms.
Across six 12-month terms, Judo outperformed the next best provider by more than 25 basis points for the majority of the Award observation period. Canstar Research noted that the difference was even greater across longer terms, particularly in 18–24 month terms, where Judo’s current rate was 50 basis points above the next best provider on Canstar’s database.
You can compare Judo’s current rates to other providers across a range of terms using Canstar’s comparison tables.
Customer-Owned Institution of the Year – Term Deposits: BankVic
For the first time, customer-owned BankVic has won Canstar’s Term Deposit Award for Customer-Owned Institution of the Year. According to Canstar Research, BankVic stood out for its consistently competitive rates throughout the observation period. While the market proved particularly competitive among customer-owned institutions, BankVic won this Award based on its ability to maintain competitive rates relative to the other providers considered across all of their terms.
Canstar Research noted that BankVic consistently offered value at a time when the trend was for providers to cut interest rates.
BankVic offers term deposits with terms ranging from three to 60 months, with the option for interest to be paid at maturity or annually. It also offers a fixed 12-month term deposit, which gives customers the option to have interest paid fortnightly, monthly, quarterly or annually. Both options require an initial deposit of a minimum of $5,000 and further terms and conditions apply.
BankVic is owned by its members and serves police, emergency and health workers.
How are Canstar’s Term Deposit Awards assessed?
Canstar’s researchers assessed providers based on their range of term deposit products. They analysed the products over a six-month period to 1 June, 2021, based on the interest rate on offer. The interest rate component accounted for 85% of the providers’ overall score, and this score was calculated based on performance across two deposit amounts: $25,000 and $75,000.
Features accounted for the remaining 15% of the score and included options and requirements when opening the account, account management features, and the providers’ policies for rolling over deposits, as well as what happened when the deposit matured.
For more information about how Canstar’s Term Deposit Awards were decided, you can read the methodology.
Cover image source: Who is Danny/Shutterstock.com
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This content was reviewed by Sub Editor Jacqueline Belesky as part of our fact-checking process.
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