Savers advised to be cautious with term deposit products

Savers need to be wary of long-term deposit accounts, it has been claimed.

Although seeking a long-term fixed-rate term deposit account can see consumers receive a competitive rate of interest such products should selected with care, it has been suggested.

Indeed, an article in News Limited reveals that Bankwest had recently increased rates on its five-year fixed-rate product to seven per cent, locking money away for such a substantial period of time could actually be a misguided choice.

"If you need the money at any time during that five years you'll be up for a big break fee and also if you think rates are going up then you might wait," Damian Smith, chief executive of RateCity, states.

Those looking for tips for saving could be interested in his advice to place money into a number of term accounts lasting for different periods of time, as this can still allow them to access cash but also means money can be rolled over into higher rate products should the base rate later rise.

People aiming on increasing the amount they can place into saving accounts could be interested to hear Angus Kidman highlighted in a recent Lifehacker article that "there are some things that you can nearly always pay less for".

Written by Mark Hornby