Negotiation is just as powerful a tool when shopping for term deposits as it is when shopping for a car or a new fridge. You are probably already comfortable with walking into a shop and asking the retailer for his best price so why not do it with your bank? You might be surprised what savings rate you end up with!
The majority of financial institutions will indicate that rates are negotiable for higher balances, generally $100k plus. However, there’s nothing to stop you asking for a better rate for a lower amount. Getting the best interest rate is the key to making extra money in the long term.
You may not get too much but an extra few points of interest means extra dollars in your pocket and it’s as simple as asking one question ““ “can you give me a better rate”?
Asking for a better deal on a purchase is not only reserved for haggling at the Sunday markets, or negotiating a better price on that new big screen television at the electronics store. In fact, you can put those powerful negotiation skills of yours to use when it comes to handling your finances. If you’re thinking about getting a term deposit for your savings, you don’t have to just accept the going rate. Here are some tips on how to get a better deal on the current fixed term interest rates.
Compare term deposit accounts: know the market
A key step in trying to get a better deal on the current fixed term interest rates is to have a look at what other financial institutions are offering, so you can compare term deposit accounts. By knowing what term deposit rates are currently available, you can use this information to help in your negotiations with your preferred term deposit provider. You might be surprised at the term deposit rate the bank offers – don’t forget your business is important to them! Getting the best interest rate on your term deposit is the key to you making extra money on your savings in the long term.
Current fixed term interest rates: how you could get better
At the time of writing, a $100,000 investment on a 12-month term deposit would pay $3,450 at maturity with the maximum interest rate available on CANSTAR’s database (3.45%), but only $3,000 on the minimum rate (3.00%), a difference of $450, according to CANSTAR’s latest comparison of term deposit rates. A $100,000 deposit invested for four years could potentially earn, at time of writing, $3,950 per annum based on the highest 4 year term deposit interest rate on CANSTAR’s database. Knowing these figures gives you the upper hand in negotiations with a term deposit provider, to know what you could get and to know what you could ask for.
However, it’s important to remember that while the Reserve Bank of New Zealand’s Official Cash Rate is low – just 2.00% at the time of writing – term deposit rates may be on the rise. This makes it even more important to shop around and to compare term deposit accounts. Further, have a good think about whether you want a long-term or a short-term deposit. You might be offered better rates for a long term deposit account, but that also means your money is locked away, unable to be spent, for a longer period of time.