Shopping around for the best interest rate isn’t just a smart financial move – it’s an essential one, especially for institutions and councils with surplus funds, says a leading fixed term deposit expert.
Curve Securities CEO, Andrew Murray says when surplus cash sits idle or isn’t invested wisely, the potential to expand community and disability services, improve educational facilities, build community parks or enhance research capabilities is wasted.
“Banks often compete fiercely for large deposits, and by shopping around, institutions have the power to negotiate better rates and better terms,” he says.
“If you simply settle for the first offer or let funds continue to roll over every 90 days, you’re leaving potential income on the table, income that could be used to hire more staff, fund new projects or expand services.”
“For large sums of money, even a slight variation in interest rates can translate into hundreds of thousands of dollars over time.”
Murray says most institutions and councils have significant surplus funds that, if left idle, miss out on valuable earning opportunities.
“It’s not just about maximising a stable income stream, it’s also about fulfilling their responsibility to stakeholders and the wider community.”
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Murray says for councils, who are entrusted with taxpayer money, making sound investment decisions is crucial and often part of their reporting duties and due diligence.
“By focusing on conservative, low-risk options such as term deposits and developing a well thought out, long term investment strategy, organisations can maximise returns on their surplus funds.
“This approach ensures they meet their business requirements without putting public or private funds at risk.”
He says every cent of profit or income earned, can help improve operations and services.
“If an organisation has $12 million sitting idle in an account earning zero interest, the missed financial opportunity is significant. Even at a conservative estimate, earning 3% to 5% interest could be the difference between hiring two staff members instead of one, or extend a disability or childcare program beyond its six week duration.
“For councils, the extra money earned from interest can be used to improve local facilities, fund community projects, or hire additional staff, all of which enhance public services.
“Similarly, universities can channel this income into expanding educational resources, investing in research and staff and improving campus infrastructure.”
Murray warns locking in fixed-term deposits as a revenue stream is extremely time consuming and complex and many organisations lack the expertise and internal resources needed to navigate the banking landscape to secure the best interest rates.
“There’s a lot of research involved to compare the offerings of 90 plus different banks – and not just the interest rates, but also the deposit application and onboarding process, a daunting and difficult task that can be incredibly time consuming.
“With interest rates anticipated to drop next year, it’s more important than ever to evaluate how surplus funds are being invested.”
To ensure you’re making the most out of your investments, there are several strategies that can help you find the best interest rate for surplus funds:
- Contact the bank directly – reach out to your bank to understand their current offerings and negotiate better terms.
- Consider second-tier banks – don’t overlook smaller or regional banks or a credit union, as they often offer more competitive interest rates than the big four.
- Seek out an expert – engage an intermediary or broker who specialises in fixed-term deposits to help navigate the money market to help you lock in the best interest rates.
- Shop around – compare interest rates across a wide range of banks to ensure you’re getting the most competitive rate for your surplus funds.
- Use technology – leverage financial tools and platforms to streamline rate comparisons, track investments and notify you when a maturity is approaching – often more efficient than manual tracking via Excel spreadsheets.
