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What incentive is there to choose a term deposit over an online savings account?

Posted by cgm cgm
Message 1 of 3 1,351 Views

Term deposits are more restrictive for customers and they generally earn less interest than they would with online savings accounts.

 

 

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Re: What incentive is there to choose a term deposit over an online savings account?

Posted by PeteW PeteW
Message 2 of 3 1,347 Views

Whether our customers choose a term deposit or a savings account is entirely up to them and what suits their financial situation @cgmitchell however, speaking broadly, a benefit of depositing money into a term deposit account is the fact the interest rate is fixed for the term of the investment. This means that if variable interest rates decrease, the term deposit will remain steady and our customers may be better off as the rate may be higher than the variable rate on the online savings accounts.

 

But as I'm sure you're thinking already, this could be a disadvantage should interest rates increase and the term deposit remains steady.

 

Also, the higher variable rates offered on online savings accounts may be an introductory rate, with the ongoing rate not being as appealing. There also may be some conditions that need to be met on the account to receive a higher rate, such as regular deposits for example.

 

While online savings accounts offer easy access to your money, this can be too tempting for some customers so the fixed term nature of a term deposit can also help achieve better savings habits.

 

Hope this helps, let me know if you have some more questions.

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Re: What incentive is there to choose a term deposit over an online savings account?

Posted by cgm cgm
Message 3 of 3 1,328 Views

Thanks for the information on term deposits @PeteW.  Appreciate it!

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