Customers shun term deposits for alternatives
Falling interest rates has taken the sheen off term deposits, losing 36,000 customers over the last 12 months, Roy Morgan research showed.
The Roy Morgan Consumer Single Source Survey said term deposit holders dropped to 1.97 million.
This is in contrast to the self-managed super fund (SMSF) sector, with the Australian Taxation Office showing SMSF cash investments soared to $156.2 billion during the March quarter, up from $153.7 billion in the December 2013 quarter.
"While term deposits generally remain the major source of bank funding, the rapid growth in the alternatives such as bonus interest/reward saver accounts and mortgage offset accounts provides real alternatives for many customers," industry communications director Roy Morgan Research Norman Morris said.
High interest online accounts have soared in popularity, with 5.88 million Australians holding them, a jump of 102,000 over the past 12 months, as customers look for higher interest rates in a low interest environment.
But the biggest growth has been in bonus interest or reward saver accounts, increasing by 709,000 account holders to a total of 4.55 million.
Mortgage offset account holders shot up by 181,000 to 1.43 million.
The four big banks all lost customers in term deposits, with Westpac losing 60,000, the Commonwealth Bank (CBA) losing 31,000, NAB losing 15,000 and ANZ losing 10,000.
On the other hand, CBA gained 375,000 customers in its bonus interest/rewards saver accounts and 56,000 in its mortgage offset account, while Westpac gained 208,000 customers in its bonus interest/reward saver accounts.
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