Term deposits are among the safest investment vehicles going. But it’s not enough just to choose something safe and secure, however, when there are lots of options on the market. You need to choose the product that’s going to work out best for you and, in the case of term deposits, will work for you in the timeframe you want. More about term deposits Term deposits are essentially a savings account, but a savings account with a difference. Once you’ve deposited your money, you can’t add to it and the money has to stay in the account, untouched until the term is up – if you want to collect the full amount of interest. Most term deposits will penalise you if you withdraw some or all of your money early. With some banks, you’ll lose some or all of the interest that’s accrued so far, or you may be knocked down to a lower interest rate for the remainder of the term. One of the best things about term deposits is the fact that you know exactly how much you’re going to get when the account matures because the interest rate is fixed. This makes them ideal for targeted savings, for a big holiday or a house deposit, for example. If you know how much you’ve got to deposit and how long you’ve got to save, all you need to do then is to check out the range of term deposit rates and pick your ideal product. Comparing term deposits Although there are many ADIs in Australia that offer term deposits, lots of people tend to choose a product offered by the bank they’re already with. As many people are with one of the Big Four banks – NAB, Commonwealth Bank, ANZ and Westpac – these are the four banks looked at here. When you compare term deposits, while the interest rate is a vital factor, you also need to look at lots of other features, including: The minimum opening balance, as some providers start at just $1,000 while others require an initial deposit of at least $5,000. The penalties applied if you make an early withdrawal of any size. The lengths of the terms offered – the provider may not offer your ideal length and if a 12 month term deposit is too long for your needs, you may lose money at withdrawal. Any bonus interest rates offered for “good behaviour”, like reinvesting your money after the term has matured or for leaving it alone for the duration. Whether the money is covered by the FCS government deposit guarantee scheme, and. If you get a reminder about impending maturity so you can decide whether to withdraw the money or let it roll-over to another term. The Big Four’s best term deposit rates So, when you’re shopping for term deposits on your favourite comparison site, it’s not just about the interest rate. You might find a great interest rate on a six-month term deposit when what you’re actually looking for is a two-month term deposit because you’re saving for an amazing holiday. In these circumstances, you’ll have to choose the best from offerings of this length. Similarly, you might know you won’t be reinvesting the money at maturity so you won’t get the bonus rate that the provider offers. Here are the Big Four’s most attractive offerings. NAB NAB needs you to invest a minimum amount of $5,000 to open a term deposit and terms range from one month to five years. There are no opening or maintenance fees involved. If your deposit term is under 12 months, then you’ll get an interest rate of 2.00 per cent by investing for four months. A one month term gives you 1.10 per cent and 12 months offers 1.75 per cent. For terms of between 12 and 24 months or a five year term, you’ll receive 1.75 per cent, with two, three, four years earning you 1.65 per cent. You can opt to have your interest paid to you monthly, quarterly, half-yearly or yearly with no dip in the rates, which is an attractive feature. Westpac Like the NAB term deposit, Westpac’s term deposits also needs a minimum deposit of $5,000 (the maximum is $249,000) and this amount can be deposited for anything from one month to five years. The interest rates are slightly lower with some of the Westpac accounts, with terms ranging from two years to four years offering 1.70 per cent and no terms offering 2.00 per cent. Terms of three and four months offer1.90 per cent. However, Westpac will allow customers to withdraw funds with no penalties in cases of hardship, so this account may be ideal for some. Commonwealth Bank CommBank accepts deposits from $5,000 to $1,999,999 for anything from one month to five years. If you want to withdraw money you’ll need to give 31 days’ notice and there may still be fees applied. Balances from $5,000 to $49,000 attract interest rates of 1.70 per cent for five years and 1.80 per cent for balances between $50,000 and $1,999,999. There are no set up fees for a CommBank term deposit and this bank also offers a holding facility for money which renews at a fixed interest rate every seven days. The interest rates are 0.60 per cent here, but this removes the risk of rollover, giving you more time to decide what to do. ANZ ANZ currently offers the best interest rates of the Big Four, but you’ll need a minimum of $10,000 to open a term deposit (maximum deposit $5,000,000). In addition to this, early withdrawals mean your interest rate is reduced by three per cent on the amount you withdraw, which could be quite swingeing. If you’re fairly confident that you won’t need your money before maturity, then you’ll benefit from 2.75 per cent for 120 days, 3.05 per cent for six months, 3.15 per cent for eight months up to three years and 3.25 per cent for five years. ANZ doesn’t require set up fees but if you’re depositing foreign currency then small fees will be applied to each transaction. Term deposit rates change regularly, so ANZ might have the best rate today, but that doesn’t mean they will have the highest rate tomorrow. Keep up to date with term deposit rates at InfoChoice. The information contained on this web site is general in nature and does not take into account your personal situation. 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.