Term Deposits are a tempting option

Sunday Business Post Interview with Greg McAweeney, General Manager RaboDirect - March 31st, 2008

Continued volatility in global equity markets and uncertainty in the market, coupled with increased competition among banks to attract customer funds, have sparked a revival in interest in term deposits on both sides of the cashier's counter.

Greg McAweeney, general manager of online bank RaboDirect, said there had been a "big uplift" in term deposits since December. "People are looking to put more of their money into cash." He said. McAweeney added that term deposits tended to be more popular with savers at the top of an interest rate when rate cuts looked likely.

Customers are beginning to want more choice when it comes to fixed-term savings. Last year, the range of term deposits on offer in the Irish market was extended when online bank Rabo expanded the offering to include term deposits from one to 12 months, with one month intervals to give customers extra flexibility.

McAweeney said the most popular term varied regularly, but the three-month term deposit was consistently popular with customers. Rabo updates its term deposits on a weekly basis, with the three month term currently paying 4.45 per cent.

He said customers could opt to roll their term deposits account automatically upon its maturity. 

As term deposits continue to be a popular choice for savers, there are some new options on the horizon. Rabo is planning on developing towards the end of this year.

McAweeney said the bank wanted to offer customers "complete flexibility" and allow them to choose the exact duration of their term deposits.

The planned new online facility would allow customers to select a maturity date and be quoted a rate. The bank is also planning to allow customers to break term contracts via its website, with an online calculator to show the break cost.

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