Australian Term Deposit Rates Are Starting To Climb

Post by Sharat on July 21, 2018 · Under News · Comments Off on Australian Term Deposit Rates Are Starting To Climb 

In the past, one of the best ways to grow a nest egg was to deposit extra cash in a high interest term deposit account. However, the last 18th months have proved that old theory to be a little inefficient. Things are starting to change though.  Since the beginning of March as many as 25% of providers have hiked their term deposit rates and April was the second consecutive month where the number of rate hikes exceeded the number of cuts.  This is great news for Australian savers who prefer a set-and-forget strategy.

Why are term deposit rates climbing?

Basically interest rates all over the world have been climbing, and in Australia they tend to climb whenever the official cash rate set by the Australian central bank is hiked. The last time that happened was all the way back in 2010. Overseas funding costs for Australian banks have been rising in line with global interest rates so it is only natural that these banks look for sources of funding domestically rather than internationally.

Keep an eye out on term deposit rates

US interest rates are expected to continue to rise and this means funding in that currency will continue to get more expensive. As a result, it makes sense for Australian banks to encourage more local deposits which are cheaper relative to international debt markets. Since it is unlikely that the RBA will lift rates any time soon, savers would be wise to keep their eyes peeled on term deposit rates which allow them to obtain high interest rates on their savings with little risk.

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