Aussie savers are feeling the impact of low interest, as the RBA leaves rates on hold at a record low 1.75% for another month, and with further reductions forecast for 2016, term deposit deals are emerging as a strategy for Aussie savers to avoid further rate drops.
Traditionally, interest rates on term deposits have suffered in comparison to some high interest savings accounts, but Mozo Director Kirsty Lamont said that with many economists predicting another RBA rate cut in August, term deposits may be looking increasingly tempting.
“Savers have had it tough lately, and with interest rates on hold for now and the potential of yet another rate cut on the horizon, it may get worse before it gets better,” she said.
“So a term deposit deal may just be the solution for Aussie savers looking to lock in a decent rate while they still can.”
RELATED: Your guide to term deposit rates
While directly following an RBA rate cut may not seem like the best time to lock in a fixed term investment, Lamont said savers may be glad for the security a term deposit offers if predictions prove true and August does bring even lower rates.
A term deposit would allow savers to lock in an interest rate for up to ten years - presumably more than long enough to ride out any further interest rate reductions in the market.
Savers who don’t want to lock away their funds for such a long time, however, might find shorter term deposits a viable solution. Stashing savings away in a 3 month term deposit now would carry the fixed interest rate through to the beginning of September, bypassing an August rate cut.
The question then, of course, is what will happen to market interest rates after the Reserve Bank board’s September meeting.
Here are some of the top term deposit deals available now:
- 3 months - Bankwest Online Term Deposit - 2.90%
- 6 months - UBank Term Deposit - 3.01%
- 1 year - UBank Term Deposit - 3.01%
- 2 years - Australian Military Bank Term Deposit - 2.70%
- 3 years - RaboDirect Term Deposit - 2.90%
- 4 years - RaboDirect Term Deposit - 3.00%
- 5 years - RaboDirect Term Deposit - 3.05%
Find term deposit deals that will help you grow your cash stash at Mozo’s term deposit comparison tables, and check out which term deposit offers bagged a Mozo Experts Choice Award for Best Value here.