The current average interest rate on a 12-month term deposit means Australians are barely breaking even — but cash continues to be a popular investment vehicle.
That's according to Canstar's ‘Best Value Australia Term Deposits' research, which found that the average rate for a term deposit (TD) was around 3.87 per cent, with a range between 2.5 per cent and 4.3 per cent.
For an investment of $100,000, savers on the 34 per cent marginal tax rate would be ahead by less than $53 at the end of the year after taking tax and inflation into account, Canstar research manager Mitchell Watson said.
Referring to Reserve Bank of Australia financial aggregate data for May, Watson said the dollar value of term deposits held with banks had grown from $196 billion in June 2007 to a current value of $545 billion.
"The continuing share market volatility would seem to be making some investors nervous still, so despite the low returns cash is popular," he said.
Of the 89 TD providers Canstar surveyed, Investec was deemed the best value Australia term deposit based on the high interest it offers as well as the full online application process available to customers.
CUA was recognised as the best customer-owned institution for its competitive rates and account features, including a 14-day grace period after maturity to allow investors time to choose whether they want to re-invest or withdraw funds.
