The main feature of a term deposit is the interest you get paid at the conclusion of the term. The term deposit interest you get paid is governed by the length of time you are willing to put your money away for, and the amount of money you are able to invest.
It’s not always the case that a longer term automatically equals higher term deposit interest rates. Financial institutions use term deposit interest rates as a way to attract particular lengths of investment to help their overall financial situation.
For example, they might decide they need more money invested for a period of six months rather than one year, so they might in fact offer higher term deposit interest rates for the shorter term.
Term deposit interest is generally only paid once, at the conclusion – or maturity – of the term. Some term deposit accounts credit your interest more often, but most don’t. That means if you invest $50,000 for six months at a term deposit interest rate of six percent, you will receive approximately $1500 of interest paid at the conclusion of the six month term.
To check whether your best term deposit interest rate is competitive, you will need to compare your term deposit to other products in the market. This can be easily done at financial comparison websites like RateCity, where you input the amount of money and the term you’re willing to invest for. You will then see a list of accounts ranked by the term deposit interest rate they pay for that amount and term.
The table below displays some of today’s highest interest rates for 1 year term deposits.