A term deposit is an investment of money with a bank or financial institution for a fixed period of time. You can grow your wealth by earning interest on your deposit at a fixed rate over the term.
Some term deposits run for three months or less, while others can last for years. While many banks won’t let you withdraw your money until your deposit ‘reaches maturity’ at the end of the term, some term deposits will let you withdraw money early if you pay a penalty fee and give sufficient advance notice.
Term deposits can be popular with people who prefer the security of knowing how much interest their money should earn over a specific period, rather than dealing with other risky investments.
Find and compare 3 month term deposits
Product | Max rate | Min. deposit | Company | Interest rate | Next rate increased | Features | Real Time Rating™ | Go to site | |
|---|---|---|---|---|---|---|---|---|---|
1.00% p.a for 36 months | $50,000 |  Term Deposit | 0.65% 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 | ||||
1.00% p.a for 12 months | $50,000 |  Term Deposit | 0.70% 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 | ||||
1.00% p.a for 12 months | $5,000 |  Term Deposit | 0.90% 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 | ||||
1.00% p.a for 5 months | $50,000 |  Term Deposits | 0.75% 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 | ||||
1.05% p.a for 3 months | $10,000 |  Term Deposit ($10k - $250k) | 1.05% 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 |
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What are the pros of three-month term deposits?
- Greater flexibility than long term deposits: Choosing a shorter term deposit can mean accessing your money again sooner, and choosing whether to roll your deposit over or switch to another term deposit deal.
- Lower risk: You can know exactly how long your money will be tied up and how much interest you should earn.
- Helps manage your spending: Once locked in, you can’t easily access your deposit until the end of the term. This means it can’t be easily spent on everyday items.
- Helps with saving: By depositing your wealth to earn interest, you can save money to spend on big-ticket items.
- Set and forget: Once your term deposit is locked in, you don’t have to do anything else until the term ends.
What are the cons of three-month term deposits?
- Generally lower interest rates: Shorter term deposits often have lower interest rates than longer term deposits, so you may earn less interest on your savings.
- Less access: Your money cannot be withdrawn during the term without being charged a penalty fee.
- Fixed interest rate: If variable 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 term deposit?
If you can find a good interest rate, locking up your money for a shorter term like three months could let you get a decent return on your investment, while still enjoying some flexibility. For example, if you were to receive a tax refund or an inheritance, you could choose to put this money in a three-month term deposit to earn interest while you work out your long-term financial plans.
While longer term deposits often have higher interest rates than shorter term deposits, you may find that the more money you have to deposit, the higher the interest rate you may be offered.
When you’re comparing term deposits to find the best interest rates for you, remember that term deposit interest rates are usually listed at the ‘per annum’ or annual rate. This means if you choose a three-month term deposit, you should earn a quarter of the interest on your deposit that you could earn over a year.
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 deposit (plus the interest you’ve already earned) rolled straight into another fixed term. If the rollover is automatic, and you forget the end date of your three month term deposit, your money might be reinvested even if you don’t want it to be. The rollover interest rate could be different to your original interest rate, especially if you had a three-month special term deposit with a higher introductory rate.
It’s worth comparing three-month term deposits to make sure you’re not only getting the best interest rate for your needs, but the right term deposit features and benefits as well. When your term deposit matures, you can also compare other options to work out if you want to roll your deposit over or switch.
Mark Bristow
Senior Financial Writer
Mark Bristow is a senior financial writer for RateCity and an experienced analyst, researcher, and producer. Working for over ten years, Mark previously wrote and researched commercial real estate at CoreLogic, and has seen articles published at Lifehacker and Business Insider, among others. Most recently, Mark has joined RateCity working across finance as a whole. Whatever the topic, Mark’s goal is always to provide simple solutions to complex problems.
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FAQs
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.
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.
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.
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.
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.
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.
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.
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.
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.