Great interest rate offered by Macquarie Bank:
Interest paid at maturity
Term Interest paid at maturity
3 months 1.75% p.a.
6 months 2.40% p.a.
9 months 2.70% p.a.
1 year 3.25% p.a.
Interest paid monthly
Term Interest paid at maturity
3 months 1.75% p.a.
6 months 2.39% p.a.
9 months 2.68% p.a.
1 year 3.20% p.a.
Not that they'd get particularly excited about 3.25% p.a.
On the other hand, they wouldn't be particularly excited about withdrawal pauses either. This offer is obviously an order of magnitude safer.
Not that they'd get particularly excited about 3.25% p.a.
The ones that are at -99% would jump at the chance, if only… if only…
I can split my multi millions into $1m each account.
username checksout.
That is lol funny :)
Fake because my username.
Given the RBA is likely to make more rate rises, I can see why they’d be keen to get you locked in for a year
Which makes RBA rate rises is actually a deal, without that these deals won't happen. :)
Also shows their hand somewhat - they’ve obviously done the numbers and are taking a safe bet that rates will rise beyond that.
That’s not how any of this works.
If they’re angling towards a more intricate strategy, I’d love to hear your insights.
Economists are more often wrong than right. RBA could easily put on the brakes if they wish to and adopt BOJ's approach.
its a month early-wdl period, and a half-month interest penalty. Not the worst if you need to break early
Your advice on interest penalty is totally WRONG.
Are you a Financial Advisor by chance ?
nterest adjustment
The interest adjustment is 25 per cent of earned interest and will be deducted from the interest paid to you.
Example
If you have a $100,000 term deposit invested at 3.00% pa for a term of 90 days with interest being paid at maturity, and you terminate the term deposit 65 days into the term, then $133.65 will be deducted from the interest paid to you.3 This is calculated
as follows:
$100,000 x 3.00% x (65/365) x 25% = $133.56
Consider 5 Y TD at 3% on $100000 broken after 3 years.
Interest is $250/month.
On advice given penalty would be $125
True position is interest paid after 3Y is $9000.. break fee. 1/4 of that .
Penalty would be $2250.
Just curious here, but doesn't this mean an early withdrawal results in an effective interest rate of 3/4 of the published full-term rate, meaning if you took the 12 month 3.20% TD, then exited at 3 months, you'd earn 3/4 of 3.20%, ie 2.4%, which is higher than the 3 month TD rate?
3.25% on a Term Deposit is pretty good. This would mean at least 4% cash rate from the RBA.
People with large mortgages will be screwed
How do you figure that? Why would the cash rate be 4%, rather than 2.5%?
Because why would the bank lend from us at 4% when they can lend from RBA at 2.5%
Because the banks require a minimum % reserve of cash in order to make additional loans, and the coming deflation will make cash scarce, so banks want to lock down their long term deposits asap.
@greatlamp: Hello Shacktool, I'm on a genuine quest for knowlege here, do you have any links for info on coming delflation. Deflation worries me a lot. DM if preferable.
I'm on a genuine quest for knowlege here
Search Youtube for 'Milton Friedman' and/or 'Thomas Sowell'. Prepare to be enlightened :)
@Harrow33: Sowell won't teach you a thing about inflation, you will learn the mindset of a libertarian though.
Sowell won't teach you a thing about inflation
Because you said so lol…
He wrote a couple of books specifically on this, but hey you know better than someone with a PhD in Economics right?
https://www.amazon.com.au/Basic-Economics-Thomas-Sowell/dp/0…
https://www.amazon.com.au/Applied-Economics-Thinking-Beyond-…
He even has a book that explains attitudes like yours:
https://www.amazon.com.au/Vision-Anointed-Self-Congratulatio…
@Harrow33: So rather then watching some random self- proclaimed YouTub expert.
.. get the information directly from the horses mouth.. The RBA has a whole section on education.
https://www.rba.gov.au/education/resources/explainers/banks-…
So rather then watching some random self- proclaimed YouTub expert.
Milton Friedman won the Nobel prize for economics and was economic adviser to Ronald Reagan and Margaret Thatcher. The Economist described him as "the most influential economist of the second half of the 20th century". So he is neither "random" nor "self-proclaimed".
If you are interested in learning economics, then his work is a great place to start.
But thanks for sharing an insights into your personal beliefs, so funny lol…
economic adviser to Ronald Reagan and Margaret Thatcher.
Because that worked so well for the world. Lol indeed.
They wanted info about inflation/deflation and how the reserve bank & official cash rates work. Reserve Bank is the best source of information.
Because that worked so well for the world.
Well yeah, it did. Anyone who grew up in the 70's saw quite clear and obvious improvements in the 80's thanks to supply-side economic polices championed by Friedman that even Bob Hawke embraced parts of.
They wanted info about inflation/deflation
Which is economics, which Milton Friedman is widely recognised as a world leading expert is in this field.
Reserve Bank is the best source of information.
It is one source, but anyone interested in learning anything should always try to expose themselves to more than one source of information.
Look at variable savings rates now, many for over 2% and cash rate is only 1.35%.
Because why would the bank lend from us at 4% when they can lend from RBA at 2.5%
That is not how lending works. The RBA does not have an endless pool of money to be 'loaned' out.
Also, as Shacktool mentioned, look up 'fractional reserve', it is like contention ratios for lending. ie Decades ago economists realised that you don't need a savings to loan ratio of 1:1, so if it was say 10:1 you only need $1 in savings to cover you for $10 in loans and the system still works.
@1st-Amendment: I am not an expert in that area but my understanding is that 1:10 system works while people have money to service their loans / mortgages.
Russia took Ukraine, China will take Taiwan, who is next ?
India with disputed territories up north (or people from India can probably say more about Shri Lanka and what Indian Navy did in the past) ? Indonesia and Easter Timor ? etc.
We may face big changes in the world. Is it a problem by itself ? I do not think so. But … we do not have any manufacturing, no large scale industry, almost no research. So, unemployment rate can go up through the roof.
IMHO.
@1st-Amendment: Fractional reserve isn't used in Australia. You likely mean capital adequacy rules. There are significant differences.
Fractional reserve isn't used in Australia. You likely mean capital adequacy rules. There are significant differences.
Different words for the same basic concept, ie there exists a ratio greater than 1:1 of credit to security…
Banks don’t fund their balance sheet by wandering up to the RBA window with a wheelbarrow to borrow at cash every day.
Outside limited specialist programs, banks don’t even borrow from the RBA. Or borrow at the cash rate. Regardless of what breathless Daily Tele headlines scream every time rates move.
Because they don't borrow money from the RBA.
https://www.rba.gov.au/education/resources/explainers/banks-…
Banks don’t get their funding from the RBA (except the TFF which was an exceptional circumstance, but now has been switched off).
Yes because they’ll take the hit short term to get you over as a customer
With 3% off Amazon giftcards, they already lured me in the door.
Haha, not a chance. Interest rates are going to skyrocket. Ubank is offering 2.35% next month.
Isn't 3.25 > 2.35?
Isn't 1 month < 12?
Nobody can predict this with any certainty. Our economy is very sensitive to interest rates and will likely be in recession soon if the RBA goes too hard.
Banks forecast rates to set lending and term deposit rates. A little more then 6 months ago some were offering three years fixed loans at less than two percent (I got 1.86 for three years late last year). Goes to show how wrong so called experts can be.
Is there a formula to work out whether a term deposit is better than putting money in an offset account? i.e. Term deposit = current home loan interest + 1.5% to get better returns.
You need to factor in the tax rate you are on and will be paying against your term deposit vs tax deductions on investment loans.
Ah OK, thank you.
Is interest income from term deposit longer than 1 year considered capital gain and taxed at different rate ?
Interest income is not capital gain.
No,. it's basic income & added to your income tax to determine the rate.
Capital Gains is buying an asset (like shares, houses, etc) and the price difference when selling. It can go up or down. Where as a term/bank deposit your principle deposit is pretty much guaranteed and you get x% at the end (or paid during the term).
If term-deposit-rate x (1- marginal-tax-rate) > your mortgage-rate,
Then it can be better to put the money in a term deposit. But remember that if the mortgage rate is variable it can go up seversl times during the term-deposit term.
Also your term-depsit interests counts towards your total annual income, so it can affect other things like Medicare levy, phi rebates and all.
what about the fact that some mortgages are compounded daily/weekly whereas i'm not sure how often this term deposit is compounded (if at all?). becomes tricky to calculate.
Offset is always better as it's a higher rate, 100% of your mortgage , there is also no nasty tax later
Always? I am fixed at 1.8% with derated offset. It’s high time I start reconsidering where to hold cash.
Offset doesn't quite work with fixed i don't think, on variable it's a no brainer , not sure what condition are attached to fixed
OP, min deposit is $5k FYI.
I guess your savings are better of in offset account if you have one given the rates could increase beyond 3.25%
Members equity bank is offering 2.5% on 6mths
Thanks OP for the info, but this is a bad deal when the market is expecting another rate rise.
Even without a further rate rise, a measly 3.25% locked in for a year is just “money grab” considering the current RBA cash rate is already 1.35%.
As soon as rates hit 2% the media's going to start crying poor, econimic disaster, battlers on the street…
does not beat inflation. practically offering the bank to burn your money on your behalf
So what else should you do with cash right now?
I shred $5 bills to fill my tacos. Much cheaper than lettuce
first thing is borrow as much as possible, interest rate even at 4% is lower than inflation. So you are already getting paid. Then double whammy your cash by selecting where to park based on your risk appetite… mutual fund, asx200, stocks etc.
fixed term savings are out of style but may appeal to boomer as they may likely have very low tolerance for risk and rather slow burn at 2-3%
first thing is borrow as much as possible, interest rate even at 4% is lower than inflation
if you don't have collateral, the rate is likely going to be higher than 4%. If you have collateral - then be prepared to lose that collateral if economic hard times come to pass, and you fail to make enough income to service the debt.
Who doesn't know that borrowing to invest is going to earn you more? The problem is the risk - it's not an easy thing to do, and one should not push the idea that this is the "correct" way. It varies by so much per individual that it's useless to give general advice.
I'd wait until next month. The same economists that predicted the rate rise in July also predict that rates will continue to increase.
When Macquarie (and everyone) price their TDs, they look forward at the interest rate curve. If consensus is for an increase next month, it'll already be priced in.
Mortgage? What's that? People on ozbargain naturally are so frugal with spending their homes are paid in full with Shopback and Cash Rewards rebates
Listen to this man. If you haven't been able to secure a mortgage for over inflated house prices, go to your nearest mortgage broker and open one ASAP.
Do you people not have mortgages?!?!
Still waiting for that 50% crash ay? Dw, it's coming just keep waiting! Lol
The same people waiting for the crash are the ones now saying 'oh wait interest rates are heading to 5-6%, still not worth it'.
They'll never buy, they will always find an excuse, then keep complaining.
I have a few friends like this, in their late 30's, have never bought, and have been saying property is overvalued since our uni days (nearly 20 years!)
@tightm8: Yep, don't forget the people who would rather save for another 2 years to get that 20% deposit meanwhile house prices have gone up another 2% all in the name of saving $5k on LMI haha
I have a few friends like this, in their late 30's, have never bough
And amazingly enough they are still alive and kicking.
Living a life just like everybody else.
Amazing.
Nah I've secured my trust fund house already.
But your flawed thinking that every is waiting to "time" the market and not because they just can't break into it.
Is this an out of season April fools joke?
Yep, psschhhh why are they whinging about wanting bread, eat some cake geez!
do you not have a home loan offset
We did this crazy thing called saving up 65% deposit, bought a house in a suburb we could afford within walking distance of a train. then paid off in 5yrs (saved a fortune only having ine car and driving 5k/yr). These kinds of rates help save up a decent deposit. Then last year sold the house because the suburb was popular and bought something nicer further out with change.
How long ago was that? My parents did that early 2000's, but the house back then was $130k =)
Saving 65% for $1mil will take some time
It's all about location not the property itself. Lady we bought our house from a few years ago moved to the country, now she has no hope of getting back with Sydney house prices.
10yrs ago.
Don't buy a $1m house then. The problem with people is they expect to start at the top and not start at least halfway up and work for it.
I'm not sure where you are, but have a look at the state & local development plan for the next 30yrs so buy somewhere up & coming, Buy somewhere near transport, shops. And stop wasting money on frivolous things like buying lunch, Uber eats, takeaway coffees & and the like.
Learn to cook, we eat $60/kg costco steaks, because they cost the same as a bigmac, but taste much better.
Houses aren't expensive. Location is. If you don't mind leaving far our from main cities then you can live in nice large places.
and bought something nicer
… and then you die.
Was it worth it?
One day that home loan of yours might be paid off, so there'll be no offset account. In fact, some other people might already be in that position. Weird huh?
Judo bank higher rate I think
Do you need to provide ID to close a Macquarie account? They want photo ID in order to help me retrieve my Macquarie ID. It would just be easier to close my account
Plenti's rolling one month rate was 3% this evening, for those who don't want to lock their cash up for a few months.
Obviously exclusives all the bitbro's