Term Deposit Investment

Don???t risk your term deposit investment by missing out on better interest rates.

RateCity calculated that 19 out of 20 people don’t switch bank accounts, which means those with term deposits could be putting their money at risk.

Term deposits are a fixed investment where your money is locked away at a set interest rate for an agreed amount of time. However, what some people aren???t aware of with term deposit investment accounts is that if you don’t notify your financial institution of what you want to do before it reaches maturity, the account automatically rolls over.

What this means is that your term deposit investment basically starts again for the original length of time. For instance if you opened a three-month term deposit account, it automatically rolls over into a new three-month term if you don’t notify your financial institution of what you want to do. While this may seem fine, the issue is that the interest rate will be set at whatever their current interest rate is for that term so it may not be the best deal at the time and you could miss out on lots of interest.

Another important thing is that because term deposits are a fixed investment if you decide to break out of the agreement early you will be lumped with fees for breaking the contract. These fees are dependent on the investment amount, the amount of time left in the contract and the institution.

To avoid this happening notify your bank what to do, whether you would like to withdraw or reinvest your money.

However, in order to make sure you get more out of your money, you will need to work out which selection best suits you. Here are some tips to help you with your choice:

• Short-term or long-term: You will need to work out if you are better off with a short-term or a long-term investment. This will depend on how much time you can afford to tuck your money away and which terms are offering the better rates.
• Do you homework: Another key is to do your homework and shop around to see what rates other financial institutions are offering and work out if you can get a better rate elsewhere.
• Compare. Whether you are considering starting a term deposit or if your current term deposit investment is nearing maturity, make a note in your diary to shop around and compare term deposits and see if you can earn more by making the switch.

Consider the table below which shows 1-year term deposits currently available.

Compare term deposits