Compare term deposits to earn tax-free interest, says banker

People looking for a good place to invest their spare funds should compare term deposits or online savings accounts, it has been suggested.

Alex Tilbury of News Limited urged Australians to get pro-active about their savings, particularly after the federal government introduced new tax incentives for savers on July 1st. The move means half of the first $1,000 of interest earned on deposit accounts is now tax-free.

He spoke to Tony Meredith, Suncorp’s executive manager for deposits, who argued that term deposits are particularly suited to people who are saving for a goal and want to make their money work harder for them.

"A 12-month term deposit will generally give you a higher rate when interest rates are on the way up," he said.

"Fixing your funds means you don’t have access to them during the term. It is important for people to assess their individual need for the funds and how likely they are to require them over the next 12 months."

Mr Meredith also suggested that people combine a high-interest savings account with a 12-month term deposit in order to retain immediate access to a certain portion of the funds while maximising returns.

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