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Written by Matt Kirk Published: May 6 2020 Investments
How much money do you have sitting in accounts earning practically nothing in interest?
You might be surprised at how much in total is held in low interest bank and share market trading accounts. Everyone needs funds on call but many of us have more than we need in these low rate accounts.
This “cash drag” is expensive. Australians’ failure to switch term deposits at maturity to the best rate is estimated to cost them around $8.9 billion a year in foregone interest – and that’s just one sector of the investment market.
Those funds are lost to investors who allow maturing term deposits to roll over without checking if there is a better rate.
It hasn’t always been easy to invest in term deposits. You can go onto bank websites and research rates but switching between banks is time consuming, particularly for new customers who have to take 100 points of identification to a branch.
Fortunately, investors now have a one-stop marketplace that enables them to not only find the current market rate but then verify their identity online and invest immediately. The investor has control of the decision and the money is transferred directly between banks.
You only need to verify once, making future transactions quick and easy. When the deposit matures, you can research your options again – because interest rates will probably have changed – and seamlessly switch to another term deposit provider without having to visit banks to close and open accounts.
Apart from earning higher interest than in a standard savings or share trading account, investing in term deposits online is convenient and the investor has a wide range of offers to choose from.
When interest rates are low and many other investments are making losses, it’s important to make your money work hard.