Term Deposit Scam27 September 2011, 1:42 PM |
I thought I was pretty cool when I set up my term deposit with a 6% interest rate. With such low risk 6% is not a bad figure for doing absolutely nothing. I figured I had the best bank in the world. Reliable, honest and with great products. Not like those big bullies with all their fine print, hidden fees and dodgy products.
But now I want to move my money into more fertile pastures. My deposit has matured and is already half way through another 6 month term. So I contacted the bank to see how much interest I would get if I closed that term early. I rang them twice to confirm and the figure they gave me each time was actually just more than half the total interest at maturity. This seemed like a good deal, so I asked them to close the account.
Oops. Epic fail. It seems even the bank staff where duped by their own wordiness. The figures they gave me still needed to be minced, diced and broiled to come up with the real total of ... practically zero.
Now they're trying to sort out the mess.
When I opened the account naturally I asked what happens if you close the term early and was "You get a reduction in the interest payable". When I asked how much they said "It depends on when you close the term. Our computer figures it all out". I should have been more persistent, because the answer is actually very simple, just not very attractive.
It turns out that any withdrawals from the term deposit earn only 0.25% interest.
I know.
Practically nothing.
Now I see how banks can do well out of term deposits. I imagine a lot of people draw money from their term deposits which means the bank pays them close to nothing for the loan of that money.
Clearly there are better investments elsewhere.