A term deposit is a lump sum of money invested at a financial institution for a set period of time.
In depositing the money, customers agree on the amount they are depositing as well as how long they are depositing it for.
Terms generally range from a few months up to 10 years, but this can vary from lender to lender.
Both the amount deposited and the length of the term deposit often determines the interest rate awarded by the lender.
Generally, longer-term deposits offer a better interest rate than short-term deposits (although this is not always the case). So interest rates for term deposits over $20,000 are likely to be more generous than for term deposits of, say, $2,000.
Term deposits of $20,000 are fairly common and are offered by many of Australia’s major lenders.
Where to find $20,000 term deposits
As with most financial products, there is no one-size-fits-all $20,000 term deposit. It is important for consumers to make sure the product suits their needs before applying.
RateCity provides product information on many of Australia’s major banks and credit lenders. Term deposit information and comparison tools can be found on the term deposits page.
For a full overview of a $20,000 term deposit or any other term deposit, including amount, interest rates and fees, click through to the product page on the website.
Benefits of a $20,000 term deposit
A $20,000 term deposit, or any sort of term deposit, gives you the ability to lock in an interest rate, even if your bank subsequently lowers its term deposit interest rates.
This is an advantage over traditional savings accounts, where the interest rate on your $20,000 deposit could fall at any moment.
Term deposits are a great product for enforced saving, as they lock the funds away for the length of the term.
Interest rates are typically higher than with regular bank accounts (also known as transaction accounts) or savings accounts. This is the trade off-for keeping the money in the account for the life of the deposit.
Things to look out for with $20,000 term deposits
Before applying for a $20,000 term deposit, or any other term deposit, there are several things to keep in mind.
First, make sure you are only depositing what you can live without for the length of the term; some deposits do not allow early access to funds. Early access is allowed on selected deposits, but this will normally result in a reduction in interest rate or in some cases a forfeit of any interest.
It is also important to check the other interest rates over $20,000 that are available in the market. While term deposits do offer a certain level of security, a high-interest savings account may provide a better deal. But this is not always the case, and sometimes the slightly reduced rate of a term deposit is a worthwhile trade-off for the security it offers.
Term deposits can also come with monthly fees as well as early withdrawal fees. This is another area to check before applying as account-keeping fees can reduce the benefits of a higher interest rate. These fees can normally be found in the fee disclosure documents on the lenders website, alternately RateCity has product pages which include a fee summary.