Term deposit holders 'having to tighten their belts'

The Reserve Bank of Australia's (RBA) decision to make two consecutive monthly cuts to interest rates were not as universally celebrated as some may think.

While people with home and personal loans benefited from May's 50-point reduction and this month's 25-point adjustment, those who hold term deposits were not so happy.

A lot of Aussies who have savings funds will see the rates on their deposits fall in line with the RBA's cuts and it is inevitable that older people who have spent years building up a nest egg will be worst affected.

Amelia Christie – a research policy officer at the Combined Pensioners and Superannuants Association of New South Wales – told the Sydney Morning Herald the rate reductions have come at a bad time for workers who are approaching retirement.

She said that 30,000 of the group's members have already outlined their intentions to tighten their belts because of the lower rates on their term deposits.

"They definitely struggle with that because they've got a fixed income effectively, so it does affect the amount of interest they receive," Ms Christie was quoted as saying.

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