CUA: Customer preferences shifting to at-call deposits

Term deposits remain an enduringly popular banking product in Australia and each year Canstar research and rate the term deposit products available from Australian financial institutions. This year we have researched 99 term deposits offered by 79 providers. We compared each product across two term deposit amounts, $10K and $75K and six weighted term tiers. In 2015 Canstar is pleased to announce that CUA is our winner of the Customer-owned Institution of the Year – Term Deposits.

We caught up with CUA General Manager, Products and Marketing, Jason Murray for some insights into current customer behaviour.

Q: When it comes to at-call or locking in for a set term, has there been much change in customer preference over the past 12 months?

A: Customer preferences are currently shifting more towards at-call deposit accounts, although there is still plenty of customer appetite out there for both options. The view within the market that we may be approaching the bottom of the interest rate cycle, as well as some economic uncertainty, means some customers are reluctant to lock their savings away in term deposits.

The popularity of CUA?s at-call accounts has also been boosted by the successful launch of new transaction and savings accounts in 2014. These new products include a new transaction account, the CUA Everyday Account, and a new online savings account, eSaver Plus, which offers a generous variable interest rate, including bonus interest for making regular deposits. These new products continue to be popular with customers.

Q: What should customers weigh up when deciding between a term deposit or an at-call account?

A term deposit will generally appeal to customers who are happy to lock away their funds for a fixed term and are looking for the certainty of a fixed rate of interest. They can also remove the temptation to dip into your savings.

Customers who need access to their savings may prefer an at-call savings account, provided they?re willing to accepting a variable interest rate.

Whichever option you choose, a consistently competitive rate is important to grow your savings. Customers should be cautious of special or introductory rates that quickly revert to a lower rate after only a few months.

Of course, you don’t have to choose only one option. Many CUA customers have an at-call savings account and term deposit/s and divide their savings across the two types of accounts. Investing in multiple term deposits, with different maturity dates, can be a good way to secure a good rate of return while still making some of your savings available on a regular basis.

Q: What are some of the most popular terms that your customers choose?

A: For term deposits up to 12 months, the most popular terms will typically be those that have the best interest rate on offer at the time. Terms ranging from 6-9 months appeal to the majority of customers looking to invest in a term deposit, with customers tending to favour the best interest rate within that range. The proportion of customers looking at term deposits for longer than 12 months is typically much lower, particularly while the official cash rate is low.

Customers should be wary of “special” term deposit rates, particularly if there are much lower rates across all other terms. These special rates may revert to a much lower rate after the term deposit matures.

CUA maintains consistently competitive term deposit rates across a wide range of terms, which sets us apart from many other financial institutions.

Canstar congratulates CUA on its win. Readers can download the Canstar report here.

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