Term deposits 'are the way to go to lock in interest rate'

Those who take out term deposits should be aware they will not be able to access their funds for a certain length of time.

People who are keen to save some money might like to take out term deposits, as they are the products to have for those keen to lock in the interest rate.

This is according to Anthony Keane, writing for the Herald Sun, who pointed out some even offer better rates than online savings accounts.

However, people will not be able to access their cash for a certain period, which can range from a few months to several years.

And it could be better to rely on these instead of a transaction account because the latter are more profitable for banks, according to Datamonitor senior analyst Harry Senlitonga, plus more savvy savers seem to be moving their money to high interest online bank accounts.

He stated the latter still account for 27 per cent of overall household deposits, although the interest rates on them tends to be less than one per cent, while more than a third (35 per cent) of people have a balance of less than $500 on them.

What's more, Mr Senlitonga added: "At the moment the return on the online savings account looks very attractive. It's a winning situation for consumers."

But he warned customers to make sure they check out the small print as some of these products can come with strings attached, such as rates changing or specific minimum deposits being required each month.

This advice comes after John Kavanagh, writing for the Sydney Morning Herald, recommended individuals should check the rates on their term deposits as the best deals on these offerings tend to be for the ones that last between six and 12 months.

In addition to this, he pointed out many deposit-takers will get rates of around six per cent, although some of the levels can be as high as 6.6 per cent.