Best Certificates of Deposit

Certificates of deposit are great ways for you to secure your savings and earn a guaranteed rate of interest, while your chosen bank is able to use your deposits to strengthen their business and even increase their credit rating. You may receive a certificate of deposit when you open a term deposit account, to confirm the amount and the term you have invested for, however, a certificate of deposit is also an independent financial product, which may be the best investment option for your needs.

About Certificates of Deposit in Australia

More Australians are realising the importance of saving, rather than spending, however, in making the decision to be more financially responsible, you want to make sure you’re doing it right, right? That is why you may be looking at your fixed investment options, because while no investment or savings account can be 100% guaranteed as safe, or to increase in value, there are financial products which offer a higher measure of security and a more comprehensive guarantee and the best certificates of deposit can do all that and more.

To help with your savings and investment decisions, find out more about the best certificates of deposit, for example:

• A certificate of deposit is a record of your money with the bank. Since you have worked hard for your savings you want to make sure they are safe as they work hard for you too, so when you deposit a substantial amount of your savings with a bank, you can be issued with a certificate of deposit, as a record of the money you hold with the bank.
• Banks become more secure from more deposits. Australian banks all use the money deposited with them in savings and investments, to lend out to their mortgage and personal and business loan customers. However, you may not know that the more a bank builds up the number of deposits it holds, the higher their credit rating will be, which in turn makes them a safer bank and able to lend out even more, growing their business even further. Since the banks want to encourage deposits to increase their security and their profitability, they are willing to guarantee to pay you interest on your certificate of deposit.
• Interest is paid at maturity. You can pick the terms of your certificate of deposit, it could be one day or one year, but most commonly certificates of deposit are held for three to six months, and can be fixed for up to ten years with some banks. The best rates are paid on the certificates of deposit which are fixed for the longest time, however, you need to make sure you have the liquidity to manage without your invested funds for the duration of your fixed certificate of deposit investment.
• You can choose a flexible certificate of deposit interest rate. Some banks will issue you a certificate of deposit with a flexible interest rate, so you will earn a standard rate, but when official rates rise, the interest you earn can rise too. This also means there is a risk your interest rate will go down, but in the current Australian economic climate, a variable certificate of deposit is likely to increase in value.
• You can invest internationally with certificates of deposit. Certificates of deposit can be purchased and sold and therefore you can choose a certificate of deposit in a number of currencies, from a number of countries. Keep in mind however, that interest rates may vary between different countries’ certificates of deposit, and the level of risk can vary significan’tly.
• Certificates of deposit are independent of a bank account and can be traded. Just as you can purchase a international certificate of deposit, the investments can be traded and this is the major difference from a term deposit. Term deposits are linked to a bank account, and where you will be issued with a certificate of deposit upon beginning a term deposit, they are different products.
• Early access can change the purchase value. As certificates of deposit can be purchased and sold, in accessing a certificate of deposit before the end of the fixed term, you are technically repurchasing the investment product, and the price may have changed as it is outside the terms of the original sale. As such, accessing your certificate of deposit early can result in fees and a lower interest rate.
• Fee free to open. Certificates of deposit typically require a significan’t initial investment with some banks requiring a minimum $100,000 deposit, however there are no other establishment fees or ongoing fees associated with the product.

For more information about the best certificates of deposit, and other fixed investment options, view our comparison tables here. You can also follow our secure links to each provider’s website to find out more or begin an online application.