Hmmmm ... Let's do the figures on a 1 year Term deposit versus regular saver with on demand.
Assuming you have the minimum of 20,000 in Investec then the return based on the current best buys is as follows:
One Term Deposit Return
20,000 EUR @ 4.5% for 1 year = 675.00 EUR return
Regular saver with on demand
Average 14,000 EUR @ 3.60% for 1 year = 378.00 EUR return
Average 6,000 EUR @ 5.50% for 1 year = 247.50 EUR return
Total = 625.50 EUR
The above, obviously, assumes that the Anglo Irish rates will stay the same for regular saver and on demand accounts for the next 12 months. This seems unlikely and I personally think these rates will decline further.
Of course the ECB may also cut but there's not much further to go
Yeah, based on recent surveys it seems more than 50% likely that the ECB will go to 0.75% in either June or more likely in July.
0.50% or 0.25% seems unlikely unless Euro zone wide deflation takes hold, but by no means impossible.
As for increases in the ECB rate, based on media speculation, this is not likely to happen until late 2010.
More weight behind going for the term deposit fixed option, unless you think that unexpected ECB rate increases are in the pipeline inside the next 12 months.