Online saver accounts vs term deposits

Online savings accounts are safe and can earn up to 2.5 per cent above inflation but there are tricks to these.

The online “bonus” savers often pay their high rates for the first four to six months, or they punish you for taking money out in any month, or they punish you for not putting money in.

Term deposits are more straightforward in the rates they pay: the rate is the rate. However, they are inflexible – you have to stash your money for a set period and will lose your high-interest yield if you try to withdraw early.

These cash-deposit options may not have the high returns of equity markets, but they are guaranteed by the federal government up to $250,000 if the institution fails.

Source: Sydney Morning herald