Depositors struggle to get five per cent

Retirees dependent upon their savings and people saving for home deposit are the big losers from the yesterday's interest rate decision to cut one per cent from official interest rates. A fifty thousand dollar deposit will earn no more than about five per cent interest or $2,584 per year if the cut is passed on in full by banks and deposit taking institutions. The rate cut will not apply to existing term deposits. Hybrid securities and corporate bonds issued by banks are two alternatives for retirees suffering a cut in income as a result of recent rate cuts says financial planner Neil McKissock. Other options include setting a number of term deposits with different maturities says financial advisory firm iPac.

Source: The Australian Financial Review