Term deposits not set and forget

02/03/2010

ASIC released the results of its ‘health check’ of the Australian term deposit market. ASIC says ‘dual pricing’ coupled with the potential for term deposits to rollover by default if the investor does not take action, creates a risk that a retail investor could inadvertently end up in a much lower interest term deposit.

‘For retail investors, the key message is that they need to be alert when their term deposit is maturing to ensure they are getting the best deal on their new term deposit,’ said ASIC’s Chairman, Mr Tony D’Aloisio.

Mr D’Aloisio said that retail investors should ask themselves the following questions: What will the interest rate be if I renew my term deposit? Should I switch to a different term to get a better rate? Should I switch to a different bank, credit union or building society to get a better rate? Does another product, such as a high interest at-call account, offer me a better deal?

‘While term deposits are a low risk investment, investors should not see them as a ‘set and forget’ product,’ Mr D’Aloisio said.

Source: ASIC