It is imperative that cotton towels are washed on a hot setting (60 degrees) in order to sanitise them. Keep in mind that your towel touches very intimate parts of the body so cold water washing is not going to be sufficient.
For domestic use, wash at least once a week and avoid fabric softeners. The waxy residue that builds up over time will affect the towels absorbency.
We have found that the GNLD washing powder is excellent for cotton and other natural fibres and use one called G1 Laundry. A little goes a long way and there is no build-up of residue with this product. Highly recommended.