Bank Term Deposit

A bank term deposit is unlike an ordinary savings account, in that it restricts your access to your funds. However, in return for locking away your funds for the term you chose, your bank term deposit account will pay you a guaranteed rate of interest. This can help you grow your funds towards a savings goal, an investment plan or a long term financial dream.

Features of a Bank Term Deposit

When you are considering a new financial product, it is easy to get caught up in the sales pitches from the banks telling you all of the best features of their bank accounts. However, to really make the right choice for your needs, not for what the bank is telling you that you need, consider the features of a bank term deposit as they are, without the hype, and how they relate to your needs. A bank term deposit is:

• A fixed account with no access. While you can view your bank term deposit using the regular internet banking systems, you can’t make changes to your bank fixed deposit. This means no more deposits or withdrawals once your account is activated and no changes can be made to the term either.
• Your chosen term and deposit amount. Your bank term deposit is fixed once the account is opened, however before the account is activated your choices are very flexible. You can choose the exact deposit amount you feel comfortable making, and if the bank term deposit account you are comparing has a minimum investment amount higher than you can afford, then that is not the account for you.
• A fixed account, term and amount means a fixed rate and return on your bank term deposit. Since the bank knows the exact time frame and amount of your term deposit, they can calculate and then guarantee a fixed interest rate. This interest rate is fixed for your entire term and is calculated daily, and compounds daily at the same rate, earning you a pre-calculated and guaranteed return.

Who is Suited to a Bank Term Deposit?

If the features of a bank term deposit account sound good to you, then you could benefit from a fixed savings investment. To truly benefit from a bank term deposit, consider whether you:

• Like the security of a name you know. While there are actually more building societies and credit unions in Australia than there are banks, the banks tend to be larger businesses and more well-known. Therefore, if you want to feel sure you are fixing your bank term deposit with a provider you know, then you may consider a bank term deposit.
• Like the security of pre-calculated returns. With an interest rate which is determined before your term begins, your returns can be calculated from the beginning too. This sort of security is not found with any other type of bank account and if you want to have all the information about your investment up front, then a bank term deposit may be the best financial product for you.
• Have funds you don’t need to access. Banks can typically be less flexible on their early access fees and policies. If you require access to a bank term deposit before maturity then you are likely to be charged early access fees as well as earn only a reduced interest rate.

If you have weighed the pros and cons of a bank term deposit and decided this is the best account for your needs, view our comparison tables here, to find the best deal on a bank term deposit for your term and deposit amount. When you have chosen a bank term deposit which best suits you, follow our secure link to the online application form and apply today.