Some term deposits rates have reached seven per cent, making them "fashionable again", it has been noted.
Term deposits have become "fashionable again", according to one industry expert.
In a piece for the Sydney Morning Herald, Lesley Parker noted that rates as high as seven per cent have drawn people to this type of product once again with the amount of money in them doubling in three years in Australia.
But she noted that consumers should look past the headline rate and this is also the view of Canstar Cannex financial analyst Adam Beu.
He noted that the interest earned can be wiped out by the cost of possessing the product and leaving it early could also be an issue.
"The penalty can be as high as 60 per cent of the interest earned," he noted.
As well as this, there is the risk that the interest rate could increase while a person's money is locked away.
This advice is in contrast to some tips for saving from Nick Gardner, writing for News Limited Newspapers, who stated in February that term deposits would be a good place to invest.
By Joe Letts
