Average term deposit rate is now 3.75%

Depositors have been cushioned from falling interest rates by stiff competition for retail deposits but rates are still coming down. According to the Reserve Bank, the average three-year term deposit rate has fallen from 7 per cent in early-2010 to 4.85 per cent in July.

The average rate across all term deposits has fallen to 3.75 per cent but if you shop around for a special you can get almost a percentage point more.

In hip-pocket terms, a retiree who put $100,000 into an average bank three-year term deposit in late-2009 would have their income cut by almost a third if they automatically roll over their deposit when it matures.

Source: Sydney Morning Herald