Term Deposits
Are term deposits safe as houses?
If you’re saving for a home loan deposit, a term deposit could be a smart place to park your spare cash.
3 month special term deposits
Now showing 1 - 6 of 6 term deposits
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Product | Max rate | Min. deposit | Company | Interest rate | Next rate increased | Features | Go to site | |
|---|---|---|---|---|---|---|---|---|
2.50% p.a for 60 months | $1,000 |  Personal Term Deposit | 2.00% p.a for 6 months | Automatic Maturity Rollover Early Withdrawal Available Is Covered By Government Gurantee Joint Application Available Maturity Alert By Email Maturity Alert By Phone | More details | |||
2.00% p.a for 3 months | $250,000 |  Term Deposit ($250k+) | 2.00% p.a for 3 months | Automatic Maturity Rollover Early Withdrawal Available Is Covered By Government Gurantee Joint Application Available Maturity Alert By Email Maturity Alert By Phone | More details | |||
1.70% p.a for 3 months | $1,000 |  Term Deposit | 1.70% p.a for 3 months | Automatic Maturity Rollover Early Withdrawal Available Is Covered By Government Gurantee Joint Application Available Maturity Alert By Email Maturity Alert By Phone | More details | |||
1.60% p.a for 7 months | $5,000 |  Advance Notice Term Deposit | 1.45% p.a for 3 months | Automatic Maturity Rollover Early Withdrawal Available Is Covered By Government Gurantee Joint Application Available Maturity Alert By Email Maturity Alert By Phone | More details | |||
1.60% p.a for 5 months | $1,000 | Green Term Deposit | 1.15% p.a for 2 months | Automatic Maturity Rollover Early Withdrawal Available Is Covered By Government Gurantee Joint Application Available Maturity Alert By Email Maturity Alert By Phone | More details | |||
1.25% p.a for 60 months | $5,000 | Term Deposit | 0.85% p.a for 3 months | Automatic Maturity Rollover Early Withdrawal Available Is Covered By Government Gurantee Joint Application Available Maturity Alert By Email Maturity Alert By Phone | More details |
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A term deposit is an investment of money deposited with a bank or financial institution for a fixed period of time (or term) and at a fixed interest rate.
You cannot withdraw the money until the end of the term – whether it’s a three-month special term deposit, or one that lasts for more than five years.
However, ‘advance notice’ term deposits will allow you to withdraw the money before the end of the term if you pay a penalty fee and give sufficient advance notice.
Term deposits can be useful for people who prefer the security of knowing exactly how much their money is earning over a specific period rather than dealing with the regular fluctuations of the money market.
What are the pros of three-month special term deposits?
- Low-risk – You know exactly what you’ll be earning and how long your money will be tied up.
- Helps manage your spending – Once locked in, you cannot access the money until the end of the term. So you can’t spend it on unnecessary items.
- Helps with saving – The opposite of the above; it can help you save for big-ticket items.
- Set and forget – Once it’s locked in, you don’t have to do anything else until the term ends.
What are the cons of three-month special term deposits?
- No flexibility – Your money cannot be withdrawn during the term without being charged a penalty.
- Locked interest rate – If the market interest rates rise, your term deposit won’t follow suit because the rate is locked in for the length of your term.
What are the features of a three-month special term deposits?
If you can find a good interest rate, locking up your money for a short period like three months can be a good way of getting a decent return on your investment, while still maintaining some liquidity with your money.
It can also be helpful if you come into a healthy chunk of money (such as a tax refund or an inheritance) and want to park it somewhere, earning interest, while you decide on your longer-term plans for it.
As with any fixed-term deposit, the main goal is to find the best interest rate for the term and amount you are investing. You’ll generally find that the more you deposit, the higher the interest you’ll be offered, whether that’s for a three-month special term deposit or one with a longer term.
Remember when you’re comparing interest rates that they are usually listed at the ‘per annum’ or annual rate. That means you’ll need to divide by four to find out how much you’d earn on a three-month special term deposit.
You may also find that your three-month special term deposit offers a ‘rollover’ feature. This means that when the term ends, you can immediately have the amount (plus the interest you’ve already earned) rolled straight into another fixed term.
Please note that if the rollover is automatic, and you forget about the expiry of your three-month special term deposit, your money might get reinvested even if you don’t want it to be.
You also need to be aware that even if you do want your three-month special term deposit to be reinvested, the interest rate may be lower than when you first made the deposit.
Nick Bendel is RateCity’s property and personal finance editor, and covers property, loans, credit cards, superannuation, and other bank products. Nick has previously written for The Adviser, Mortgage Business, Smart Property Investment, Elite Agent, Lifehacker, Business Insider, Yahoo Finance, and InvestorDaily, and loves getting elbow-deep in the latest ABS, APRA and RBA data.
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What is a fixed term deposit?
A fixed term deposit is a safe and stable way to earn a fixed return on your cash investment.
Fixed term deposits are essentially bank accounts where you lock your money away for a fixed period and earn a fixed interest rate on those funds.
Fixed term deposits can be both short term, which is usually anything under 12 months, or long term, which can be up to 10 years.
Once the fixed term has ended, the bank or financial institution will give you back your initial deposit plus any interest you earn during the fixed term period.
Depending on the type of fixed term deposit account you open, when the term matures, you may have the option of rolling the funds over for a new term or withdrawing the funds.
Unlike other savings or transaction accounts which offer variable interest rates and flexible features, fixed term deposits offer fixed interest rates, which means the amount of interest you earn will remain the same during the term of the deposit.
What is a term deposit rate?
The term deposit rate is the agreed interest rate for your term deposit. It remains fixed for the term of the deposit.
For example, if you deposit $5,000 for 12 months at a 2.5 per cent term deposit rate, that 2.5 per cent term deposit rate will be fixed for the entire 12 months and won’t change until the term matures.
The term deposit rate is one of the most important factors to consider when comparing your term deposit options. The general rule of thumb is that the longer the term, the higher the term deposit rate.
Term deposits are a popular type of investment because they’re safe and provide reliable returns.
The return you get on your term deposit will be determined by the amount you initially invest, the amount of time you choose to invest it for, and the term deposit rate.
What is the best interest rate for a fixed term deposit?
The best interest rate for a fixed term deposit changes all the time, as interest rates move up and down and banks compete with each other to win market share.
To find the best interest rate for a fixed term deposit, it’s helpful to understand how interest rates are applied to term deposits.
There are three factors that determine the fixed interest of term deposits:
- The size of your deposit
- The duration of the term
- The frequency of interest paid
Term deposits vary in duration from one month to five years or more. Interest rates generally work on a sliding scale; shorter terms get a lower rate, longer terms get a higher rate.
Here are a couple of examples of how interest is applied to term deposits.
- A $10,000 term deposit taken out over 12 months, with interest paid at maturity, might receive a fixed interest rate of 2.20 per cent.
- A $10,000 fixed term deposit taken out over 12 months, with interest paid quarterly, might receive a fixed interest rate of 2.00 per cent.
Using the size of your deposit, the duration of the term and how often you want to be paid interest, you can shop around for the best interest rate for a fixed term deposit.
How do you calculate term deposit interest?
If you’re ready to open a term deposit, there’s a lot you’ve already figured out. You’ve decided on the length of your term and found the best interest rate, but there’s something you still might be wondering. How do you calculate term deposit interest?
One of the easiest ways to calculate term deposit interest is by using a term deposits calculator. However, you can also estimate your total earnings on your own.
A fixed interest rate signifies what percentage of your original balance your term deposit will earn annually. For example, a deposit of $1,000 at an interest rate of 3 per cent will earn three per cent of $1,000 annually – meaning you’ll earn $30 of interest each year.
You can estimate your interest using three variables. Multiply together your deposit amount, interest rate, and term length and you’ll approximate the interest a deposit will earn. For example, if you invest in a term deposit for $5,000 at an interest rate of 3 per cent for two years, your interest would total $300.
What is a short term deposit?
Sometimes you only want to tie up your money for a short period, maybe because you want to make a quick return on a large sum, or just to have more flexibility and access to your money. That’s where a short term deposit can come in.
Short term deposits are usually less than 12 months (e.g. 30 days, 90 days, six months or 12 months), though you will still not be able to access your money for the length of the term without incurring a penalty fee.
At the end of the term, you can roll your deposit over, or you can withdraw it. An advantage of short term deposits is that you can take advantage of higher interest rates with a different financial institution, if they are available.
What is a long term deposit?
A term deposit refers to when you lock your money in an account for a certain period of time and at a specified interest rate. You will not be able to access your money for the length of the agreed term without incurring a penalty fee.
A long term deposit generally refers to a term deposit that lasts for more than 12 months – which in some cases may be as long as 10 years.
Usually, the longer you store your money, the better the interest rate you’ll get, so a long term deposit will tend to pay higher interest than a short term deposit.
At the end of the term, you can roll over the money (plus the interest you’ve made during the term), or you can withdraw it all.
What is a term deposit?
A term deposit is an investment savings account. A term deposit usually pays a higher rate of interest than a regular savings account, with the interest rate fixed for the term (or duration) of the deposit.
You can open a term deposit account for one month or up to five years depending on your investment goal, and invest as little as $500 to start earning a profit.
With a term deposit, you get to decide how much you want to invest (the principal or deposit), for how long (the term or duration) and the frequency of interest payments.
A term deposit represents a secure form of investment, unlike trading in shares or purchasing real estate. And a term deposit up to $250,000 is protected by the government guarantee.
How often do term deposit rates change?
One of the advantages of a term deposit is that this type of investment enjoys a fixed interest rate. This means that the interest rate that you have signed up for will not change during the period of your term deposit, regardless of rising or falling market interest rates.
However, it is important to be aware of the end of your term deposit. Once your term ends, whether this is in three months or three years, many banks will default to rolling over your deposit into a new term, sometimes with a lower interest rate. Once your term deposit rolls over, you will then be locked into this new fixed interest rate for another term.
Make sure to use the grace period at the end of your term to your advantage. Shop around for a competitive interest rate and reinvest your money accordingly.
Is a term deposit an asset?
The short answer is yes – a term deposit is, indeed, an asset.
Regardless that the funds are locked away for a fixed period, when it comes to the balance sheet, it’s considered an asset.
Aside from being an asset, term deposits are also cash investments which are held at financial institutions like banks or credit unions.
Term deposits work by investing a set amount of cash in a bank account for a fixed period at a fixed interest rate.
When you deposit your money in a term deposit, you’re agreeing to lock it away for a predetermined period, ranging from short-term periods of one month all the way to long-term periods of up to 10 years.
Term deposits are a popular way to boost your bottom line by investing your money and increasing the value of your asset.