Commonwealth rolls term deposits into low yield accounts
Commonwealth Bank is vulnerable to the loss of deposit customers because of the pricing and service strategy used by the bank. CBA entices new deposits with market leading term deposit rates, but rolls customers into low interest rates at the maturity of the term deposit. For example, CBA offers 5.1 per cent on a three-month $25,000 term deposit, but only 1.25 per cent on a two month term deposit and 1.95 per cent on a four month term deposit. CBA then moves its market leading rate around between term deposits of relatively short maturities, and makes it hard for customers to monitor their return.