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.
High Interest Term Deposits
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Product | Max rate | Min. deposit | Company | Interest rate | Next rate increased | Features | Go to site | |
|---|---|---|---|---|---|---|---|---|
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 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 | |||
1.60% 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 | |||
1.25% 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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While some people love high-risk and high-reward investments, others tend to gravitate toward investments that promise low-risk options.
High-interest term deposits are investments that provide reward without the risk. If you’re seeking an investment option that’s safe and secure, then high-interest term deposits might be your perfect starting point.
What’s the difference between a term deposit and a savings account?
Term deposits and savings accounts have a lot in common. They offer you a place to deposit your money, they earn interest and they’re housed in a financial institution, like a bank.
However, the two also have their differences. The biggest difference is accessing the funds in a term deposit and savings account. With savings accounts, you’re free to deposit and withdraw when you please, but this isn’t the case for term deposits. With term deposits, your money is not accessible until it reaches maturity at the end of the term. If you want to access your funds early, you’ll likely pay a penalty fee.
What are the most important features of high-interest term deposits?
As the name suggests, the most important feature of a high-interest term deposit is its interest rate. It’s important to find the best interest rate available because this is the rate your investment will earn throughout the entire term. The interest rate cannot change after your term has begun.
Apart from a high interest rate, there are other features you can look for in a term deposit, such as the payment frequency. The payment frequency refers to how often your interest is paid to you. Some common payment frequencies are annually, quarterly, monthly and at maturity.
Another feature to keep your eye on is partial withdrawal allowance. Some institutions will allow you to withdraw a portion of your money before the end of your term without being charged a penalty fee. If you suspect you may need to withdraw some of your deposit during its term, you might consider choosing a term deposit with partial withdrawal allowance.
How can you make sure you’re getting a high interest rate?
One of the best ways to ensure you’re getting a good interest rate is to compare term deposits. This will help you understand the current market and the financial landscape of high-interest term deposits.
It’s important to keep in mind that the financial market is always changing. This fact means that an excellent interest rate today might be entirely different to a great interest rate a year from now. The market is always fluctuating, with average rates moving higher and lower.
Try to grab the best rate available by researching your options and comparing the term deposits that fit you best.
How can I increase my term deposit earnings?
It can sometimes seem like you don’t have much control of your term deposit after your money is locked away, and in some ways this is true. That’s why if you want to maximise your deposit earnings, you need to do your research before applying for the term deposit.
The most efficient way to maximise your earnings is to find the highest interest rate possible. High-interest term deposits increase your earnings without much effort. Since the going rates are always changing, be sure to do your research to find the best rate available.
Another way to increase your term deposit earnings is to choose a special term deposit that will offer you compounded interest rather than simple interest. Compounded interest means that the interest you earn on your original deposit is reinvested so that it can earn interest itself. In other words, you earn interest on your interest. Compounded interest will make you more money in less time.
What do I need to apply for a high-interest term deposit?
The information you need to apply for high-interest term deposits is similar to what you need applying for a bank account. You’ll need your personal details, such as name, address and phone numbers, as well as your driver’s licence number or identification card. These items will help your bank verify your identity before you open an account.
You’ll also need to supply your bank with your tax file number so that your bank can withhold the appropriate amount of tax. In addition to your TFN, you should also bring along your transaction account details. Your bank will use these details to transfer your money at the end of the term.
If your term deposit allows more than one person to hold the account, you’ll also need the names of others on the account.
Enjoy a low-risk reward when you apply for high-interest term deposits.
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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Are term deposits covered by the Australian government guarantee?
Yes, term deposits are covered by the Australian government guarantee.
Under the Financial Claims Scheme, the Australian government guarantees term deposits up to $250,000, capped at one person, per financial institution.
This means that your term deposit (if it’s $250,000 or less) is protected in the unlikely event the bank, building society or credit union collapses.
If you have more than $250,000 in a term deposit with one the one bank, for example, then only up to $250,000 of your principal is covered.
If you’ve got more than $250,000 and you wish to invest in a term deposit, you could consider dividing your money between term deposits and banks (limiting each deposit to $250,000 per bank).
That way all of your deposits are protected by the Australian government guarantee and you will not suffer any financial losses.
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.
Which bank has the best term deposit rates?
If you’ve been shopping around for a term deposit, you might be wondering which bank has the best term deposit rates.
Term deposit rates will generally be affected by the amount you choose to deposit and whether you opt for a short or long term deposit.
Longer term deposits tend to have higher interest rates than shorter terms. The trade-off for earning a higher interest rate on your term deposit is that you can’t access your funds for the duration of the term deposit.
When comparing which bank has the best term deposit rates, it pays to do your research and compare how your funds will fare over the short and long term.
Unlike home loans or savings accounts which give you the option of fixed or variable rates, term deposits are always fixed, which means you get a guaranteed amount of interest over the term of the deposit.
Are term deposits safe?
Term deposits can be a great way to build your savings, but before you invest, you might have one important question. Are term deposits safe?
When it comes to investing your money, you can choose between high-risk and low-risk options. High-risk options tend to have a better potential payout, but you also risk earning no profit at all or even losing your original investment.
Low-risk options tend to earn less profit than high-risk options, but they’re also safer, with little to no risk of losing money. Term deposits fall into the low-risk category.
Term deposits are safe because they’re low-risk, but they’re also protected by the Australian government’s Financial Claims Scheme. This government guarantee will insure your deposit for up to $250,000 per person, per institution, meaning that even if the bank collapses, the government will reimburse you for your deposit.
Can you add money to a term deposit?
When you open a term deposit, you agree to lock your money away for a set period and earn a fixed amount of interest during that period.
Where everyday transaction accounts give you the flexibility to deposit and withdraw funds as frequently as you like, term deposits trade flexibility for higher interest rates.
Once your funds are deposited in a term deposit, they’re fixed for the length of the term, meaning you can’t add additional funds midway through the term.
When the term deposit matures, you may have the option to add additional funds and roll the funds over for another term, or you may choose to withdraw the money at that point.
If you have extra funds to invest, you could consider opening an additional short term deposit account or a high-interest savings account.
It’s worth noting that you can withdraw the funds midway through the term, but a penalty is likely to apply.
Can students make term deposits?
If you are a student who has managed to save some money and are looking for a safe investment option, you may be considering a term deposit. Most term deposits (and other bank accounts) are open to anyone who is at least 18 years old.
There are also some term deposits open to younger students, some even without an age limit. These term deposits are usually opened on the student’s behalf, by their parent or guardian.
A term deposit is generally a safe investment option, especially if you want to make sure you can’t touch your savings for a set period of time. If you are 18 or older, shop around for a competitive interest rate before committing. If you are under 18, speak to your parent or guardian to get started.
How do term deposits work?
Term deposits are flexible, low-risk, and earn you interest over time. But before you apply to open a term deposit, you might be wondering: how do term deposits work?
A term deposit is an agreement you make with a financial institution. This agreement will specify a certain amount of money that you will give the bank for a certain amount of time. In return, you’ll earn a fixed amount of interest on your deposit throughout your term.
Term deposits work as an exchange between a financial institution and an individual. You can think of your term deposit as a loan to the bank. Because you’ve loaned the bank your money, they’re willing to pay you interest on your deposit.
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.