Shop around for the best term deposits

The Reserve Bank of Australia's (RBA) decision to cut the cash rate by 50 points at the start of the month came as a huge blow to term deposit holders.

Cynics often suggest that banks are far quicker to follow the RBA when it comes to savings accounts and term deposits, but are less inclined to lower the rates attached to their mortgages, personal loans and business finance packages.

However, somewhat surprisingly, not every company slashed their savings rates by the full amount advised by the central bank.

A lot of organisations made a point of keeping their rates relatively high in an attempt to attract new customers.

This is good news for people thinking about setting up a nest egg for when they retire, as there is far more competition in the term deposit market than some might expect.

Chief executive of National Australia Bank Cameron Clyne said some of his bank's main rivals have made an extra effort to promote their term deposits.

"Westpac has declared deposits as the new black – it is going out there aggressively competing for deposits," he remarked.

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