1. What are Term Deposits?
Term deposits are a type of savings account. Your money is invested for an agreed period of time (usually 6, 12, 24 or 36 months) and you receive a fixed interest rate over that time.
The key difference between a term deposit and a savings account is that you cannot access your money during the agreed term, unless you place a request to withdraw funds before your deposit matures.
2. Why would I use a term deposit?
There are a couple of benefits of term deposits that make them a great way to save.
- Like a normal savings account, they are very secure.
- They help you budget as you’ll know the exact amount of interest you will accrue over the period.
- The interest rate won’t change over the agreed period of time.
- You’ll often get a higher interest rate than regular savings and transaction accounts.
- You can’t touch your money for the duration of the term deposit. This means you can’t be tempted to use it on unnecessary expenses that we can often find ourselves dipping into our savings for.
No matter what you’re saving for, be it a holiday or a house, a term deposit can be an effective and secure means growing your money.
3. How much do I need to get a term deposit?
The minimum amount you need for a term deposit account varies between banks. At Bank Australia, the minimum amount you need to open a term deposit account is $500.
Interest rates will vary based on the amount you are investing and the time you are investing it for.
4. Are there any costs involved in getting a term deposit?
No, there are no account keeping fees to hold a term deposit account. However, if you wish to withdraw some or all of your money from your term deposit before the end of the agreed period of time, fees may apply and there may be an adjustment on the interest you have accrued. If you invest more than $50,000 with Bank Australia, your monthly fees are waived on an Everyday Access Account.
5. What else should I consider when choosing where to open a term deposit account?
Just like every dollar you put in a savings account or that you borrow, the money you invest in a term deposit is used for something by your bank. We think it’s worth considering what the bank uses your money for and whether this aligns with your values.
What it’s used for depends on the bank. When looking at where to get a term deposit, take some time to research and/or ask the question of what the bank invests in and lends to.
If the answer includes industries that cause harm to people or the planet such as fossil fuels, weapons, tobacco and gambling, chances are that your term deposit is contributing to those investments.
That’s why where you bank matters. And, it’s where you choose to get a term deposit can make a positive difference in the world.
Bank Australia doesn’t put profits before people. That’s why we have never and will never lend to the fossil fuel industry. We believe in responsible banking, so we don’t lend to industries that cause harm to people or the planet.