The latest research from Cantstar Cannex has shown investors’ preference to allocate their money to term deposits is still strong.
The research firm’s Deposit Account Star Ratings revealed individuals have locked away $2.3 billion in funds in term deposits covering a variety of maturity periods. This is compared to a level of just under $1.8 billion in February 2009.
“We’re seeing term deposits increase in popularity, partly due to an erratic sharemarket and partly due to bigger, brighter, shinier term deposit rates offered by the banks,” Canstar Cannex financial analyst Adam Beu said.
According to the study, term deposits for periods over one year have been offering interest rates in excess of six per cent or the past 12 months.
But while the preference for term deposits is strong, the popularity of online savings accounts has waned.
“A little while ago, promo rates for online savings accounts jumped as high as 7.75 per cent for a period of three to six months. Now, they are back down to 6.01 per cent with the base rates hovering around the cash rate and now roughly 4.75 per cent to 5.35 per cent. The only exception is UBank which offers online savers 6.01 per cent, and has done for a while now,” Beu said.
The research revealed online accounts now held $1.5 billion of people’s money but that this figure was continually shrinking.
Canstar Cannex said the study reflects a definite change in financial behaviour.
In regards to the ratings of deposit accounts the research firm awarded the top category of outstanding value to 15 offerings from a total of 12 product providers.
