Navigate Investment Choices Effectively.
Deposit Rates is designed to help investors and advisers make better-informed decisions about where to invest their money.
How to invest your money on term deposit
How we sort data
Types of investment products
Terms offered
How institutions are grouped
Interest payment options
How to invest your money on term deposit
There are dozens of organisations offering some form of term deposit option for you. These range from the banks with online savings accounts and term deposits, through to non-bank deposit takers, credit unions, fund managers and individual companies with listed debt securities.
There are two main ways of finding out what interest rate you can get for investing your money on term deposit.
One is to use our free deposit rates calculator to view rates on fixed term investments over various terms and amounts. Your search can be of a general nature, or restricted to a particular organisation type and limited to only those which hold ratings.
Secondly, you can go to the main interest rates table which will display all the institutions in our database. You can sort by various options such as interest rate, provider, amount and rating.
View our Ratings Explained section to find out more information on how investment companies are rated or for details on specific investment products read our articles in the Investing Articles section.
How we sort data
Deposit Rates’ view is that when you want to put money on deposit one of the first decisions you will make is on product type. For example, you may say, “I want to put my money into a term deposit for one year”, or you may say, “I am looking for a good savings account”.
For this reason we classify rates by the TYPE of investment product, rather than the INSTITUTION.
Types of investment products
We have seven types of investment products, namely:
- Call Accounts: Offered by most banks and you can access your money at any time.
- Savings Accounts: These tend to be products offered by banks where you can accumulate money. Rates are competitive, interest is calculated daily and security is good.
- Term Deposits: These are mainly bank term deposit rates and are generally on a fixed term basis.
- Cash Management Accounts: These are like call accounts. Cash management accounts (CMTs) are generally offered by fund managers and sharebrokers as an alternative to call accounts. CMTs are used as the core part of portfolio where dividends and payments are held before being reinvested.
- Debentures: Secured First Ranking Debentures are the staple product from finance companies. They are simply a fixed term investment in a finance company.
- Tax Paid Bonds: A handful of institutions offer tax paid investments. These have lower headline interest rates than other investments because they are tax-paid.
- Other: This section captures investment options such as unsecured notes offered by finance companies.
Terms offered
Deposit Rates uses standard terms for fixed rates, these are:
Call, 1, 2, 3, 5, 6, 9 and 18 month options, plus one, two, three, four and five year terms.
You will find that there are other terms on offer. For instance banks will have term deposit rates for four, seven and eight month investments. “Odd” rates, eg 27-months, are often used in special promotions.
Also you will find that some banks express their rates in days not months. A conversion table is here:
| One month | 30 days |
| Two months | 60 days |
| Three months | 90 days |
| Four months | 120 days |
| Five months | 150 days |
| Six months | 180 days |
| Nine months | 270 days |
How institutions are grouped
Deposit Rates has a broad classification of firms, our main organisations include: Banks, Building Societies, Credit Unions and Finance Companies and Co-operatives.
There are also fund managers and sharebrokers who offer cash management accounts.
If you want to make an investment decision based on the type of institution you can create your own custom table using this calculator.
Interest payment options
Many organisations, which will put your money on deposit, offer a range of interest payment options. These range from interest calculated daily, to quarterly payments, but there are also options for monthly payments or interest at maturity. Added to this there is often the option of compounding interest payments to your initial investment.
To keep our interest rates tables on a consistent and fair basis, rates in our standard table are displayed with quarterly interest payment options.
As a general rule you will earn more money for your investment if you keep interest payment options till maturity and by having interest payments made during the life of the investment compounded into the original principal.
For instance a company may say they will pay you 8.95% with interest paid at maturity for a one year investment. However, if you chose to take quarterly interest payments then the rate falls to 8.55%, and if you go to monthly interest payments the rate falls another five basis points to 8.50%.
Understanding Ratings
Ratings are an important tool all investors looking to put money onto deposit need to understand.
The key things to remember about ratings are that
- They are an opinion – not a guarantee
- Each rating organisation is different – understand what they do and how their scales work
- Ratings are generally giving a probability of default
- Investment grade doesn’t mean an investment is safe. Likewise a so-called “junk bond” isn’t necessarily a bad investment.
There are a number of ratings agencies that can be split into several groups.
International agencies
The first group are the large international credit rating firms, Standard and Poor’s, Fitch and Moodys. Currently the first two are active in the market and have rated a number of finance companies as outlined in the table below. Moodys doesn’t appear to be offering its services in this market, however it does have ratings on a number of banks.
One of the big issues with these firms is understanding their ratings scales, as they are not particularly intuitive.
Ratings are done by letters and range from A down to E. With each letter there are three steps, eg: AAA, AA, and A. These steps can be further graduated with plus and minus symbols. For instance you can have AA+.
Where they become tricky to understand is that the order of priority is from a triple letter, eg BBB down to a single letter. This, along with the plus and minus symbols can give misleading perceptions.
For instance a BBB- rating is actually better than a BB+.
The other misconception is this view often perpetuated in the media that there is a line in the scale and anything above it is so-called “investment grade” and anything below it is a “junk bond”.
Further confusing the situation is the view that junk bonds are bad and people should not invest in them.
The truth is that so-called junk bonds can have a place in an investor’s portfolio as long as the reward is sufficient for the risk and that it has an adequate weighting in the portfolio.