Competition for term deposits has just hotted up.
Two banks have just announced attractive special rates rates for seven and eight month terms respectively.
ANZ has added +25 bps to their eight month rate offer, taking it to 3.55%.
And SBS Bank has gone one better (or actually +10 bps better), announcing a 3.65% seven month rate.
These are rate levels that compare favourably with main bank offers at 18 months.
And both punctuate a general trend of stable of soft term deposit offer rates. In fact, as our interative chart below shows, rates have been stable for quite some time. And because markets don't really expect significant rises in the overall levels any time soon, these types of offers are in fact unique opportunities.
However, they are 'specials' and the offer periods probably won't be around too long.
In ANZ's case, you could choose their term PIE option, which would boost your effective after tax return. If you are on the 30% tax rate, their offer as a term PIE is equivalent to a standard rate offering of 3.69%. If you are in the 33% tax bracket, the comparative is the equivalent of 3.85% pa. This works because the term PIE will only charge you a final tax at the rate of 28%. (If you are on a tax rate of 28% or less, there is no advantage. to using a term PIE.)
For higher rates, you need to assess the offers of institutions with a lower credit rating. Rate offers rise significantly from non-bank institutions with sub-investment grade ("junk") credit ratings.
Using our deposit calculator to figure exactly how much benefit each option is worth you can assess the value of more or less frequent interest payment terms, and the PIE products, comparing two situations side by side.
The latest headline rate offers are in this table.
|for a $25,000 deposit||Rating||3/4 mths||5/6/7 mths||8/9 mths||1 yr||18 mths||2 yrs||3 yrs|
|* = these credit ratings in this review that are not investment grade.|
Rates in this table are the highest offered by each institution for the terms listed. You however will need to check how often interest is credited or paid. That important factor is not filtered in the above table and rates with various interest payment/credit arrangements are mixed here. However, our full tables do disclose the offer basis.
Our unique term deposit calculator can help quantify what each offer will net you.