In a somewhat surprising move, banks are lifting some of their term deposit rates despite the Reserve Bank of Australia slashing the cash rate to an all-time low of 0.25% last week.
It comes after Australia's biggest bank, the Commonwealth Bank, announced it would lift its 12-month term deposit rate by 60bps to 1.7%.
At the time, CBA chief executive Matt Comyn said the increase would support the bank's customers during this period of uncertainty.
"These are unprecedented times, and they call for unprecedented measures," he said.
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"Following today's reduction in the official cash rate by 25bps we are taking deliberate steps to further support parts of the economy most in need."
Lifting the term deposit rate would support customers who are reliant on their savings, he said.
"For our deposit customers, we will increase our 12-month term deposit rate by 60bps to 1.70% p.a. This will be available to all personal customers, but will especially benefit older Australians relying on their savings," Comyn said.
"It will ensure all Australians are now able to earn a return on their savings which is more than 1.45% higher than the official cash rate."
Since the announcement, 25 other banks have followed suit, including Westpac, NAB, St George, Suncorp, Bank of Melbourne, Bank of Queensland, HSBC and Macquarie Bank.
Westpac acting chief executive Peter King said the bank was determined to assist customers during the crisis.
"This is a once in a lifetime event and a united response by government, regulators and corporate Australia is exactly what we need," he said.
While NAB chief executive Ross McEwan said the bank would be lifting its term deposit rates in recognition that the current low interest rate environment is hurting savers.
"Our focus is clear - to support business and personal customers with their financial needs when they need it most," he said.
"NAB is open for business. We continued lending throughout the Global Financial Crisis and we'll continue to lend through this."
Analysis by RateCity.com.au found that just 2% of term deposit rates on its database offer interest returns that are equal to, or above inflation (1.8%).
The highest rate was for a five-year term deposit from Judo Bank, it said, with an interest rate of 2.15% p.a.
This was followed by Westpac (2% for eight months), First Mac (1.95% for six months), Arab Bank (1.9% for six months), and Bank of Us (1.85% for seven months).
RateCity.com.au research director Sally Tindall said that while term deposits no longer provide investors with stellar returns, they still are better than cash.
"Term deposits were once a popular option to get a consistent return on equity. Now, they are little more than a safe place to park your cash," she said.
"While the days of double-digit interest on term deposits are behind us, that doesn't mean people should just throw their hands up in the air and do nothing."
She applauded the banks for assisting consumers during the current period of volatility.
"It's great to see banks boosting at least one of their term deposit rates to give people an opportunity to get just that little bit more at this difficult time," Tindall said.
"Increasing term deposit rates will especially benefit retirees, who rely on the interest they earn from their savings.
"Notably, Westpac will this week start offering a market-leading rate of 2% for an eight-month term deposit for people aged 65 and over."
Of the big four, CBA lifted term deposits for 12 months to 1.7%, with Westpac matching the same rate as CBA. NAB lifted rates 5bps higher to 1.75% for a 10-month period, while ANZ lifted its term deposit rates to 1.35% for an eight-month period.
Whichever authorised deposit-taking institution investors choose, the government will guarantee deposits of up to $250,000, Tindall said.
Many banks are waiving penalties related to breaking a term deposit as well, she said, for those who are affected by the COVID-19 crisis.
Judo Bank topped RateCity.com.au's one-year, two-year and three-year term deposit rates, with rates of 2.05%, 2% and 2.05% respectively.
Read our full COVID-19 news coverage and analysis here.