We get it. Locking your money away for a period of time is a scary thing to do, especially if you aren’t sure about whether you’ll be getting the best bang for your buck.
During 2018 the Mozo database recorded seven consecutive months where term deposit rate increases outweighed the term deposit rate cuts.
While this was good news at the time for Aussie savers, the increases may have hinted that the banks acted in anticipation of future RBA cash rate plans.
Then in October last year, there were 41 term deposit increases and 82 decreases across all terms.
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But although cuts have outnumbered increases in recent months, Mozo Product Data Manager, Peter Marshall still believes now might still be the right time to lock away your cash.
“My belief is that the RBA will have to cut rates in the first half of the year to not only stimulate the economy, but to offset home loan rate hikes that have been the result of rising funding pressures,” he said.
“I expect the banks agree and this is why we're seeing some pulling back on some of their term deposit increases we saw during the second half of 2018.”
Marshall then went on to explain that by opting for a term deposit now, you’d be securing your rate against potential cuts down the line.
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He also encouraged Aussies savers to do their homework when it comes to finding the best value term deposit.
“Since you’ll be locking your money away for a fixed period of time, you’ll need to be sure you’re going to get the best possible return - and that means comparing your options,” he said.
For example, say you wanted to invest $5,000 for 12 months at 3.00% - Arab Bank Australia’s current rate and the highest in the Mozo database for that term - you’d earn $150 in interest.
On the other hand, if you invested the same amount over the same term on the lowest rate in the database (1.40%), you’d earn $70 - more than half of your potential earning.
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So if you think now is the right time for you to take out a term deposit, you can compare some options below or head on over to our term deposit comparison tool.