If you’re looking for a relatively short investment option, a 90-day term deposit could be a good choice for you. Here’s a short guide to help you decide.
What is a 90-day term deposit?
A 90-day term deposit (sometimes called a three-month term deposit) locks your money away in a bank or financial institution for 90 days. During that time, you earn interest on your initial investment based on the fixed interest rate you agreed on before the start of the term.
Once the investment has reached maturity, you’ll be able to access your funds and the interest earned on your deposit. If you need to access your money before the end of the term, it’s likely you’ll have to pay a fee.
Should you invest in a 90-day term deposit?
Term deposits are considered safe, low-risk investments because you won’t lose any money while it’s locked away. However, deciding whether to invest in a 90-day term deposit depends on your financial goals.
If you want to earn some interest relatively quickly to boost your savings for a holiday or wedding, for instance, a three-month term deposit could be a good solution. A 90-day deposit might also be a good idea if you’re new to term deposits and want to find out how it all works.
On the other hand, if you’re working toward longer-term savings, you may be better off choosing a longer term deposit with a higher interest rate – some term deposits are as long as seven years. You might also prefer another method of savings like a high-interest savings account.
How to compare 90-day term deposits
Using RateCity to compare 90-day term deposits is a simple way to weigh up your options and find a product that suits your needs.
Here are some of the important questions to consider when choosing a term deposit.
What is the interest rate?
Even a small difference in the interest rate on a term deposit can make a noticeable difference over the course of three months. You may also be able to secure a higher interest rate if you choose a longer term deposit (such as six months).
What is the minimum deposit?
Most financial institutions have a minimum deposit amount for term deposits. The amount you deposit can also impact the interest rate you’re able to secure, with a larger deposit sometimes equalling a higher interest rate.
What are the fees?
The good news is that most term deposits come with no set-up fees or maintenance fees. However, it’s common for banks and financial institutions to charge penalty fees for withdrawing money before the end of the term. The penalty could be a deduction of your interest rate, or a flat fee based on factors such as current market interest rates, your interest rate and your term deposit balance.
Is the money guaranteed?
The Australian government guarantees deposit balances of up to $250,000 in authorised deposit-taking institutions (ADIs) such as banks, building societies and credit unions. This means that if the institution runs into trouble, you’ll be able to recover your money from the government. Keep in mind that a small number of financial institutions aren’t covered by this guarantee.