What is term deposit rollover risk?

Term deposit rates change often. Investors and savers with money in term deposits need to compare rates regularly to ensure they are getting the best deal available.

When a term deposit matures, the bank or credit union will notify the deposit holder and ask for instructions. If the term deposit holder doesn’t reply, the institution will usually rollover the money into a new term deposit, probably at a lower rate. This is called rollover risk.

Source: Bankheadlines.com.au

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