16th December 2019, Hobart

Term deposits continue to be cherished avenues of investment. However, whatever the term deposit rates, there are snares aplenty on the lookout to capture heedless investors. If you plan to invest in term deposits, make sure you keep from the following common traps.

Early Exit Costs

A term deposit is a cash investment for a particular period. The term is also known as the lock-in period. In other words, you may not withdraw money until the timeframe expires. But what if you need to redraw the cash in the event of an emergency?

According to an expert on low-interest personal loans in Hobart, you should ask about the early exit costs. Again, if the bank asks you to open an additional account for the same, know the costs involved. A new account is often meant to exploit some term deposits.

Automatic Renewal

Experts contend that an automatic renewal might be a demerit of term deposits. If, however, you assume that the money will automatically renew, the crisis is compounded.

According to a report brought out by the ASIC, over fifty per cent of default rollovers from high to low-interest rates had surfaced. Moreover, term deposit rates, for instance, have been vulnerable to dual pricing. Keeping the above facts in mind, experts discourage automatically rolling over the term deposit.

Term Deposit Timeframe

The length of the timeframe carries the risk that there might not be scope for renewal should the interest rates fall suddenly. Therefore, according to the expert on low-interest personal loans in Hobart, it is ideal to choose a long-term term deposit investment.

Conclusion

As mentioned at the outset, investment is not without its risks. However, a degree of caution is sufficient to keep the attendant traps at bay. The latter is thanks mainly to procedural hacks. Therefore, make sure you stay abreast of the technical aspects of investment.

For more details: https://bankofus.com.au/term-deposits