Term Deposits are the foundation of Australian Savings
Term Deposits have now been the largest category of savings held by Australians for the past four years, according to a report by Roy Morgan Consumer Finance Single Source.
One third or 31.2 percent of all savings dollars by Australians aged 14 and up are now held in term deposits and since January 2009 the total of funds held in term deposits has grown by 44 percent.
However, there is a notable difference in savings behaviours when comparing key generations and it seems that it is the older generations, with more savings to put aside, who most favoured term deposits. Since January 2012, 38.7 percent of all term deposits were held by baby boomers and 41.6 percent by the Pre-Boomers.
"For Gen X, Gen Y and Gen Z, transaction accounts take top place. A link with their debit card for those accounts and the ability to access their money at any time may be some of the key triggers, combined with the fact that these younger generations have less money to put aside for the longer term," according to Norman Morris, Roy Morgan Industry Communications Director.
Infact, transaction accounts were recorded as 17.5 percent of all savings, making it the second largest savings category held by Australians. Following in third place was high interest online savings accounts with 15.6 percent.
The news is particularly astounding as those with their savings in a transaction account are doing their money very little favours. Many online savings accounts, with far better interest rates, are linked to a transaction account. Transferring funds can often be instant and done online or by mobile, making 'ease of access' a poor excuse to limit savings.
A term deposit comparison could find interest rates between 4.51 percent for 6 months and 5.13 percent for 5 year investments, showing why term deposits are Australia's most popular savings category. And if your not looking to lock your cash away, you can still find high interest savings accounts between from 3.5 percent and up to 5 percent.
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