What is a Term Deposit? | Savingsaccount | InfoChoice
Subscribe to InfoChoice to receive


Special offers
Exclusive offers
Market data, trends and insights



Subscribe
What is a Term Deposit?

What is a Term Deposit?

Term deposits are an easy way to make some extra money. Put your money into a term deposit from anywhere between one month to five years and watch your savings grow.

Basically, a term deposit:

· Is an investment of your savings.

· Has a fixed interest rate.

· Can last between one month and five years.

· Usually has a higher interest rate than a regular transaction account.

How do term deposits work?

A term deposit is one of the safest ways to invest money. By locking your money away for a set term with a fixed interest rate, you know exactly how much money you’re likely to make once the term matures.

Let's say you put $3,500 into a term deposit for three years at an interest rate of 3% per annum. At the maturity of this term, you'll have $3815. You can then choose to reinvest your money, move it to a different account, such as a savings account, or spend it.

If you don’t do anything, your term deposit will roll over into a new term and you might be penalised by taking your money out again before the new term matures.

What’s useful about a term deposit?

Term deposits can help you meet your savings goals, especially if you need to reach a savings target in a short period of time. Once you've chosen the type of term deposit and set up your investment, you don't have to think about your savings until the term matures.

Here are some reasons you might choose to invest in a term deposit:

· Saving for a holiday.

· Saving for a wedding.

· Saving for home renovations.

· Saving for a deposit on a house.

How safe are term deposits?

Term deposits are only offered by authorised deposit-taking institutions (ADI). Before making any investments, ensure you double-check that your bank, financial institution or credit union is an approved ADI to ensure the safety of your money.

Any term deposit up to $250,000 is guaranteed by the government. That means you can be confident you'll get your money back no matter what, so keep this in mind when choosing term deposits.

How can you find a suitable term deposit?

You can set up a term deposit whenever you want, but before you do there are a few things to consider. These include:

· How much money you have to invest

· The interest rate

· The length of the term, i.e. if you need the money by a certain date, this will impact how long you can save for

· Whether you'll have time to reinvest your savings

Even after you’ve put your money away for a set period of time, it’s a good idea to keep an eye on the best available deal. While you don’t want to prematurely remove your money from a term deposit, you probably want to be ready to reinvest with a good interest rate once the term is over.

If you let the deposit automatically roll into a new term, you can't guarantee the same interest rate.

Start comparing term deposits today to find one that suits your needs.



Previous Article  Next Article

Savings Account Selector

State
Savings Amount

Term
Account Type
Account Type
 




Featured Savings Accounts

Institution Product Max. Rate (%) Details
Savings Maximiser (Base rate 1.35%p.a + 1.45%p.a Standard Bonus Rate = 2.80%p.a on balances up to $100K) 2.80 Go to site
Maxi Saver (2.70% variable for first 3 months) 2.70 Go to site
Maxi Saver Account (2.70% variable for first 3 months) 2.70 Go to site
Maxi Saver (NSW, ACT, SA & NT) (2.70% variable for first 3 months) 2.70 Go to site
Maxi Saver (QLD, VIC, WA & TAS) (2.70% variable for first 3 months) 2.70 Go to site
Hero Saver (Earn an ongoing variable rate of 2.60% p.a. for balances up to $250,000 minimum deposit of $200 excludes interest monthly with no withdrawals) 2.60 Go to site
Institution Product Max. Rate (%) Details

Based on promotional or introductory rates for an online savings account of $5,000. For information on how we've selected these “Sponsored” and “Featured” products click here.



Advertisement

Find out more



Twitter Facebook

© InfoChoice Pty Ltd ABN 93 061 105 735 AFSL and Australian Credit Licence number 349445

Although we cover a range of products, providers and services we don't cover every product, provider or service available in the market. The information and products contained on this website do not constitute recommendations or suggestions to purchase or apply for any particular product. Products included on this site may not suit your personal objectives, financial situation or needs. Please consider whether it is appropriate for your circumstances, before making a decision to purchase or apply for any product. If you are considering acquiring any financial product you should obtain and read the relevant Product Disclosure Statement or other offer document prior to making an investment decision.

Go to top