Difference between a term deposit account and a high interest savings account?
I currently have a high interest savings account with an interest rate of 4.75%
So lately i have been looking at term deposit accounts, but i literally cant find one which has a higher interest rate than the account i have now.
I know how it all works, you cant touch the money for a set period etc.
But what are the benefits when i could just keep my high interest savings account which has a higher interest rate and i can access my money?
Thanks!
People who use Term Deposits often do not want to have access to it, they would prefer for it to be locked away. For alot of people, no access is a benefit, because they they will not be tempted to touch it. High interest savings accounts are handy if you think that you may need it, and in the current financial climate people are preferring to keep their money accessible whilst still earning interest.
Also, high interest savings accounts are not locked into an interest rate, they are variable. So, if someone last year had locked their money away in a 24 month Term Deposit, when the rate was up at 8% (In Australia), they would be in an excellent position today because the interest rate is now so low, it is almost half what it was.
Term Deposits are investments, High Interest Savings Accounts are convenient, but but for the long term, especially in an unstable financial environment.
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