Independent financial comparison website ratecity.com.au has been doing the sums on term deposits, and says get in quick to get a rate that is historically much better than the Reserve Bank’s cash rate. Most of the big banks will drop their term deposit rate within the next week or so – so get in quick and get a decent deal on your money, stat.

Totally crap place to put your money ... try a term deposit instead.

Ratecity boss Damian Smith says it is “historically unusual” for the deals on term deposits to be this good (that is, usually the cash rate and the rate the banks are offering for term deposits is much closer than this, so this is a winner for you the customer right now). Smith notes the average one year term deposit rate is 1.44% higher than the cash rate, and in the scheme of things – if you’re not into riskier investments like shares – them’s pretty good odds. And if you start to go into 5 year term deposits, you are looking at double the cash rate – great news (not that anyone who is, say, my age, would be keen to lock their entire savings away for 5 years, but hey. A good rate’s a good rate).

So, do you need a term deposit? Well, it is good if you can get rid of your money for a certain period of time – like 30 days, 90 days, or 120 days – and you’re interested in the higher rate of interest (who wouldn’t be?) It isn’t risky, and it is easy to understand and sign up for. If you’re currently paying off a mortgage, have personal debt or other ‘bad’ debt, pay off that first – you’ll never get term deposit rates where the interest is better than the interest you’re being charged on your credit card debt!

And remember, if you’ve been enjoying my blogs so far, sign up for the free email. It goes out once or twice a week with plenty to get you on track, out of debt, and with a bit of money understanding in 2010. Oh, and check out how my MoneyGirl 2010 EBay Challenge is going – right now I am $98.05 closer to my trip to the USA!

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