If you have been one of the lucky ones to have saved money during the COVID-19 pandemic, and are now looking to invest those savings in a low-risk, fixed interest environment, then look no further than a Term Deposit. Term Deposits provide an excellent avenue to help you save for a new car, a holiday or even a home renovation. They are not for the purpose of withdrawing savings, but are used to put money away for a fixed period of time at a fixed interest rate. The time may vary between Term Deposit providers; however they are usually between one and five years in duration. Related Reading Compare Term DepositsWhich bank has the best term deposit rates?InfoChoice guide to finding the best term deposit Your money is locked away during this time and should be untouchable. However, if you do find you need to withdraw your Term Deposit savings, you will have to pay a penalty fee. A minimum amount of money is also required to open a term deposit and can range between $1000 up to over $1 million. What to look for in a Term Deposit. 1. High interest rate. The higher the interest rate offered on a Term Deposit, the faster your money will grow. Usually the longer you invest, the higher the interest rate will be. For instance UBank offer a rate of 0.30 per cent for a 30 day term deposit. This rises to 1.30 per cent over 330 days. 1.60 per cent will be paid out annually and if you decide to roll your savings over into a further term, once your current term has ended, you will receive a 0.10 per cent loyalty bonus. You can invest a minimum of $1000 and a maximum of $2 million. As a comparison, Qudos has a higher rate of 1.80 per cent for terms of 90 days up to one year. This decreases to 1.40 per cent for the second and third years. The other thing to note with Qudos is the early withdrawal penalty calculated at 2.00 per cent on the amount of the original deposit from the start of the current term until the date of the withdrawal. Here’s a look at InfoChoice’s top six highest rate Term Deposits: The highest interest rate available may not actually take into account your risk profile. If you can’t afford the minimum deposit of $10,000 Qudos is asking for, then you’ll need to look elsewhere. 2. Minimum deposit. This is just as important as the interest rate on offer. Citibank’s minimum deposit for a three to six month term is $250,000 at 1.70 per cent. That’s pretty steep and probably out of a lot of people’s reach. So, the best thing you can do for yourself before opening a Term Deposit account is understand your risk profile and know how much you are able to invest without breaking your bank (remember that if you withdraw early you are likely to be penalised). Whether, you invest $1000, $5000 or $250,000 make sure it fits within your budget. It’s more important in this instance to know what base you’re starting from, than where you will end up. 3. Set up fees. Most term deposits have no set-up or account fees, but check the fine print before you make your decision. As stated above, you could get stung for early withdrawal fees, so stay the course until the deposit matures. 4. What terms are available. Do you want to invest for one month, three months, one year or longer? Just remember that the less time you have your Term Deposit open, the less interest you will accrue. 5. Interest rates changes. Your interest rate should not change over the time you have locked in your Term Deposit. However, if you decide to roll it over, it is likely that your rate could reduce. Ask your bank or provider, what the interest rate will drop to following maturity. 6. Options following maturity. When your term deposit matures, you will likely receive a call from your provider telling you what will happen next and how much interest you’ve earned. Don’t just blindly roll over your savings into a new deposit with the same provider. Undertake the same level of comparative research you undertook to begin with and then make a decision to stay or find a better offer. Be aware that if you do nothing and the money does roll over, you will have to pay a fee to get it out. The wash up. A Term Deposit provides a safe way to multiply your savings. This is a low risk investment option that is protected by the Australian Government's financial claims scheme. This guarantees to pay you up to $250,000 for deposits in the unlikely event your bank, credit union or building society fails. It also applies per person and per institution. With that in mind, if you have saved a little bit of money during lockdown, it’s worth looking at how best to utilise those savings. Comparing Term Deposits is a good way to start. This update is not financial advice. This article is general news and information. Home Loans: The comparison rates are based on a secured loan amount of $150,000 and a term of 25 years. Personal Loans: The comparison rates in this table are based on a loan of $30,000 and a term of 5 years unless otherwise indicated in the product name with^, in which case, the comparison rate is based on a loan of $10,000 and a term of 3 years. The comparison rates are for unsecured personal loans only for the relevant amounts and terms. The comparison rates for car loans and secured personal loans are for secured loans unless indicated otherwise. WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. Comparison rates are not calculated for revolving credit products. The products compared in this article are chosen from a range of offers available to us and are not representative of all the products available in the market and influenced by a range of factors including interest rates, product costs and commercial and sponsorship arrangements InfoChoice compares financial products from 145 banks, credit unions and other financial institutions in Australia. InfoChoice does not compare every product in the market. Some institutions may have a commercial partnership with InfoChoice. Rates are provided by partners and taken from financial institutions websites. We believe all information to be accurate on the date published. InfoChoice strives to update and keep information as accurate as possible. The information contained on this web site is general in nature and does not take into account your personal situation. Do not interpret the listing order as an endorsement or recommendation from us. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.