Latest in Term Deposits
Finance News - November 5th
After a cash rate cut, where should you stash your cash? Savings vs term deposits
Australians want to stash away a record amount of savings. With that in mind, we take a look at how savings accounts and term deposit rates are tracking during the year of the pandemic, and reveal where you can find the top rates.– Read more
What is a term deposit?
A term deposit is an investment of cash placed with a financial institution for a fixed period of time, known as the term, with a fixed interest rate for your return at the end of the term. A term deposit is commonly referred to as a TD, but can also be known as a certificate of deposit or CD.
Fixed terms can range from 1 month to 5 years and the money can usually only be withdrawn at the end of the term.
‘Advance notice’ term deposits allow you to withdraw the money earlier if you pay a penalty fee and give advance notice of 31 days. You may receive a slightly higher interest rate for an advance notice term deposit than for a standard term deposit.
Term deposits are popular for use by investors who prefer receiving a set return instead of anxiously watching the daily fluctuations of the share market. Other investors use term deposits as just one part of their investment portfolio.
Applying for a term deposit is essentially the same as applying for a normal savings bank account, and most applications can be made online these days.
How to compare term deposits
If you are looking for the best term deposit to suit your needs, you could use Canstar’s Star Ratings to help. Canstar compares term deposits using a sophisticated rating methodology that takes into account both the fees and features of the product. We compare each term deposit and then rate it out of 5, with a 5-star rated product offering outstanding features and value.
Some of the features you should look for when comparing term deposits include:
- Interest rates on offer for different terms
- What the ideal “term” or “tenure” is for your term deposit, e.g. 1 month up to 5 years
- How easy it is to open up a term deposit (should have online application available)
- Requirement for a minimum investment amount
- Whether a maturity reminder is provided and how it is delivered (e.g. SMS, email), or whether rollover of the term deposit is automatic
- Number of days available to make amendments and add more funds to the term deposit
- Whether you are able to make early withdrawals without paying a prepayment interest penalty or early withdrawal penalty
- The notice period required to be given for Advance Notice Term Deposits
And as always, be sure to read the product discourse statement (PDS) so you know what you’re signing up for.
You can compare term deposits based on your own financial requirements using the comparison selector tool at the top of this page:
Author: Nina Tovey
As Canstar’s Editor-in-Chief, Nina heads up a team of talented journalists committed to helping empower consumers to take greater control of their finances. Previously Nina founded her own agency where she provided content and communications support to clients around Australia for eight years. She also spent four years as the PR Manager for American Express Australia, and has worked at a Brisbane communications agency where she supported dozens of clients, including Sunsuper and Suncorp.
Nina has ghostwritten dozens of opinion pieces for publications including The Australian and has been interviewed on finance topics by the Herald Sun and the Sydney Morning Herald. When she’s not dreaming up ways to put a fresh spin on finance, she’s taking her own advice by trying to pay her house off as quickly as possible and raising two money-savvy kids.
Nina has a Bachelor of Journalism and a Bachelor of Arts with a double major in English Literature from the University of Queensland. She’s also an experienced presenter, and has hosted numerous events and YouTube series.
Term Deposits Glossary Of Terms
Please note that these are a general explanation of the meaning of terms used in relation to term deposits. Your bank or financial institution may use different terms, and you should read the product disclosure statement (PDS) of your policy carefully to understand everything that may apply during your investment term. You cannot rely on these terms in relation to any term deposit you may purchase.
What is a advance notice term deposit?
A advance notice term deposit is a term deposit where the institution allows you to withdraw the money earlier than the end of the term, if you pay a penalty fee and give advance notice of 31 days. Advance notice term deposits often have a slightly higher interest rate than standard term deposits.
What are basis points?
Basis points is a unit of measurement used in financial situations to describe the percentage change in interest rates or the value of a financial product. One basis point is 0.01%.
What is a cooling-off period?
A cooling-off period defines the number of days available for the investor to change the investment term or amount of money invested in the term deposit. The number of days will be specified in the PDS and the term deposit contract.
What is a coupon payment?
A coupon payment is a portion of a bond, entitling the holder to receive a payment of interest. For example, a 10% coupon paid semi-annually would yield two 5% interest payments.
What is a debenture?
A debenture is a medium- to long-term investment issued by a company when you lend money to that company. In return for your investment, you receive a regular and fixed amount of interest for the term of the investment. The invested funds (principal) are repaid at the end of the term (maturity).
What is interest paid?
Interest paid is the amount of simple interest paid on the principal amount (the initial amount of money placed in the term deposit). For example, a term deposit paying 6% interest per annum would pay 6% of the sum invested at the end of a 12-month term, or 3% at the end of a 6-month term.
What is laddering?
Laddering is a method of investing in term deposits. The investor puts some of their money in a long-term deposit and the rest in several short-term deposits that renew regularly.
What is maximum term?
Maximum term is the maximum amount of time that you can receive a certain interest rate on a term deposit.
What does it mean by maturity?
Maturity is the time at which the term deposit will expire and stop accumulating interest. Also known as the ‘end of term’.
What is a minimum term?
Minimum term is the minimum amount of time that you can receive a certain interest rate on a term deposit.
What does TD stand for?
TD stands for term deposit.
What is a term?
A term is the length of time or duration a term deposit will run for.
What is a yield?
A yield is the rate of return earned on an investment.
Other term deposit articles and guides
Our Term Deposits Ratings & Guides
Articles and Guides on Term Deposits
Term deposit account providers we research and rate
Below are some of our popular term deposit providers:
- AMP Bank
- Arab Bank Australia
- Australian Military Bank
- Australian Unity
- Bank Australia (formerly known as bankmecu)
- Bank of Melbourne
- Bank of Sydney
- Bendigo Bank
- Beyond Bank
- Cairns Penny
- Catalyst Money
- CBA Online Only
- Coastline Credit Union
- Commonwealth Bank
- Community First Credit Union
- Defence Bank
- Delphi Bank
- ECU Australia
- Encompass Credit Union
- First Option Bank
- FCCS Credit Union
- G&C Mutual Bank
- Gateway Credit Union
- Greater Bank
- Greater Building Society
- Heritage Bank
- Holiday Coast Credit Union
- Horizon Credit Union
- Hume Bank
- Hunter United
- Illawarra Credit Union NSW
- ING Direct
- Macquarie Credit Union
- ME (ME Bank)
- MOVE Bank
- Newcastle Permanent
- Nexus Mutual
- Northern Beaches Credit Union
- P&N Bank
- People’s Choice Credit Union
- Police Bank
- Qantas Credit Union
- QBANK (formerly Queensland Police Credit Union (QPCU)
- QT Mutual Bank
- Quay Credit Union
- Qudos Bank
- Queenslanders Credit Union
- Rabobank Australia
- Rural Bank Ltd
- Rural Bank ONE
- Select Credit Union
- SERVICE ONE Alliance Bank
- St.George Bank
- Summerland Credit Union
- Suncorp Bank
- Teachers Mutual Bank
- The Capricornian
- The Mac
- The Mutual
- The Rock Building Society
- Transport Mutual Credit Union
- Unicredit WA
- Victoria Teachers Mutual Bank
- Woolworths Employees’ Credit Union
- Your Credit Union
For more information on how Canstar rates term deposits, read our latest star ratings report.