Choosing the best fixed term deposit rate impacts the interest generated at the end of the term. It is the difference between your savings sitting idly in an account (you might as well just bury it in the back yard) or watching your balance grow with minimal effort on your part. Before committing your money to a term deposit account, shop around to find the best rate. A quick Google search should be a good jumping off point. With term deposits, a term can be as short as thirty days or as long as five years. Generally, the longer the term, the better the interest rate you will receive.
Should your experience with fixed investments be limited, here are a few reasons fixed term deposits are a simple, yet effective way to both save money and accrue interest:
Term Deposit Rates
- The interest rate is guaranteed for the length of the term. The rate you sign for will be consistent and the same interest rate will be applied every day of your term regardless of market fluctuations and other extraneous factors. The amount you will receive in returns are predetermined.
- Fixed rates take into account inflation. The most competitive rates ensure your investments will keep up with the rising costs of living and inflation. These rates are calculated keeping the future in consideration, ensuring the money invested is aligned or supersedes official rates. Therefore, your return does not depreciate at the end of the term.
- Fixed term deposits are practically hands off investments. A fixed rate is a low maintenance investment, and the returns right now are quite generous. Once you have done the proper research and found the term and rate that is right for you, after you deposit the money, there is very little that needs to be done. Your biggest decision will come towards the end of the term when you have to decide your next move: remove the money from the term deposit, let it roll over to another term or move it to an institution with a more competitive rate.
90 Day Term Deposits
A 90-day term deposit is ideal for those who have never invested in term deposits before or if there’s a large sum to be invested and you want a quick return. While the yields are not at high as a longer term, there are still some competitive rates on the market right now.
- UBank – has the best rate for a 90-day term and one of the lowest minimum deposits. With a rate of 3.70% p.a. and a required $1,000 to invest, this is the top pick for a short term. Like any fixed term, there is a penalty for an early withdrawal.
- RaboDirect – This term deposit rate is currently 3.50% p.a., and you will need a minimum deposit of $1,000.
- ING DIRECT – This online term deposit offers a 3.50% p.a., rate and a minimum deposit of $10,000. This could be ideal if you want to invest a large sum of money..
- Bankwest – the Online Term Deposit has an interest rate of 3.60% p.a. and a minimum deposit of $1,000. There is an adjustment for early withdrawals.
- Citibank – Like the Staff Credit Union term deposit, Citibank requires a minimum deposit of $10,000. With a rate of 1.29% p.a., this is another top term deposit if you can let a large sum sit for 90 days. Should you need to withdraw funds before the deposit has reached maturity, it will cost you 40% of the interest earned up until the date of the withdrawal.
6 Month Term Deposits
Like a 90-day term, six (6) month term deposits are great for quick returns. Right now, financial institutions are vying for your business and have some outstanding rates on the market. You can sink your funds into a six (6) month term deposit that is comparable to five (5) year term deposit rates.
- UBank – UBank offers the best term deposit in the six (6) month category. With a rate of 3.75% p.a. and a minimum investment of $1,000. Like the 90-day term, should you withdraw funds early, penalties will incur.
- ING DIRECT – IngDirect offers this rate exclusively online. This term has a deposit rate of 3.80% p.a. and a minimum deposit of $10,000. For a detailed breakdown of early withdrawal penalties, refer to the Term Deposit Terms and Conditions booklet.
- Suncorp Bank – The rate is a 3.75% p.a. and the smallest lump sum to invest is $10,000. One distinct difference between the two is the maximum amount to invest: Suncorp caps this term at $24,999. There is an interest adjustment for fund withdrawn early.
- RaboDirect – With an interest rate of 3.55% p.a. and a minimum amount of $1,000, RaboDirect offers this term deposit only online. Should you need to access to the account before it reaches maturity, the charge is comparable to the bank’s break costs and a $25.00 processing fee.
- Bankwest – the Online Term Deposit has an interest rate of 3.00% p.a. and a minimum deposit of $1,000.
1 Year Term Deposits
Remember, when it comes to putting your money into longer term deposits, make sure you absolutely won’t need it, since funds cannot be taken with incurring a penalty. Because one year is an extended period not to have access to your money, all the best term deposits listed have a $1,000 minimum, with the exception of Heritage.
- UBank – Offering a rate of 3.81% p.a., there are no ongoing or establishment fees, the standard UBank fees will apply should you need to access your money early.
- Bankwest – This term deposit has an annual rate of 3.70% p.a.. This bank also consistently has some of the better rates. If there is an early withdrawal from the account, there will be an applied interest adjustment.
- Heritage – This account offers 3.80% p.a. on the rate of return. It is more for those who have $1,000 to invest and no more than $19,999. In additional to the option of annual returns, you have the options of receiving them quarterly or monthly.
- Citibank – Citibank is the only bank on the list offering a linked account pays out on a minimum deposit of $0. The account is perfect for people not needing early access to their money because of their standard penalty of 40%.
- RaboDirect – This account requires a minimum of $1,000 has a payout rate of $1,000. Although the annual payout rate is competitive, if you opt for monthly, quarterly, or semi-annual payouts, be prepared for the interest rates to drop a little.
3 Year Term Deposits
If you are looking to invest funds and feel you have a good grip on your finances with a surplus of funds, then a three (3) year term might just be a good investment for you. It’s a great way to have your savings stay in one place for a few years, especially if you have confidence in your rate being competitive for the next three years. Each of these three accounts require a deposit of at least $1,000.
- Bankwest – Bankwest again delivers one of the best rates in the three year division with a rate of 4.10% p.a.. Like the other Bankwest accounts, should you opt for an early withdrawal, the interest will be adjusted.
- RaboDirect – This term rate is: 4.10% p.a., if interest is paid annually. Similar to the one-year term, you can opt for more frequent payouts, but the rates do take a dip. The penalty for an early withdrawal is at RaboDirect’s discretion in addition to a $25 processing fee.
- St. George – The interest yield for this term deposit weighs in at 4.10% p.a.. This account is suited for people investing a smaller sum of money since the cap is $4,999.
5 Year Term Deposits
Like a three (3) year term, a five (5) year account is a viable option for people that have the ability to invest money and not need to touch it. The rates for a five (5) year term deposit are a higher than a three year; in fact, some yield an incredible 6.1% at some banks.
- Bankwest – Bankwest tops the list again for one of the most competitive fixed term rates. Putting at least $1,000 into a Bankwest account will give you a 4.50% p.a. annual return.
- RaboDirect – This bank offers the highest of all interest rates: 4.60% p.a.. Should you be able to set at least $1,000 aside for five years and not withdraw any, this account will be the most beneficial to place your money.