powering smart financial decisions

Banks put a price on loyalty for term deposit customers

Banks put a price on loyalty for term deposit customers

A small number of institutions are offering loyalty bonuses to Australians who roll over their term deposit for a second term.

UBank, which is owned by NAB, offers a loyalty bonus of 10 percentage points, as do challenger institutions Judo Bank, LCU and Rabobank (see table below).

For example, if you invested $10,000 in a nine-month term deposit, you would earn 1.75 per cent from UBank. If you then reinvested the full deposit at the end of the term, you would earn the interest rate of the day plus 10 percentage points.

Right now, anyone rolling over a UBank nine-month term deposit would receive 1.80 per cent plus 10 percentage points, or 1.90 per cent.

Term deposit interest rates change regularly, so UBank’s interest rate nine months from now might be higher or lower.

InstitutionInterest rateLoyalty bonusHow to earn loyalty bonus
Judo Bank1.90%0.10%Roll over full deposit for a second term
LCU1.80%0.10%Roll over full deposit for a term of any length
Rabobank1.80%0.10%Roll over full deposit for a second term
UBank1.75%0.10%Roll over full deposit for a second term

Assumes investment of $10,000 for nine months. Data accurate as at 11 September 2019.  

Do your research before taking out a term deposit

One thing to remember when comparing term deposits is that while loyalty bonuses are nice, they’re not the only thing to consider.

It’s possible that an institution without a loyalty bonus might pay higher term deposit interest rates than a lender with a loyalty bonus, even with the bonus added on.

It’s also possible that, at the end of your term, you might not want to roll over your deposit, making the idea of a loyalty bonus irrelevant.

Another thing to remember is that the term deposit market can change quickly, so while a lender might pay the highest term deposit interest rate in Australia at the time you make the investment, other lenders might pay higher interest rates by the time the term deposit ends.

Did you find this helpful? Why not share this news?

This article was reviewed by Business & Finance Writer Rachel Wastell before it was published as part of RateCity's Fact Check process.



Related news