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Term Deposits

What is a term deposit?2016 Canstar Bank of the Year - 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Fixed terms can range from 1 month to 5 years and the money can usually only be withdrawn at the end of the term.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.

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How CANSTAR compares term deposits

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:

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Written by: TJ Ryan and Tim Smith


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.

Advance notice term deposit: 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.

Basis points: 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%.

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.

Coupon payment: 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.

Debenture: 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).

Interest paid: 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.

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.

Maximum term: The maximum amount of time that you can receive a certain interest rate on a term deposit.

Maturity: The time at which the term deposit will expire and stop accumulating interest. Also known as the ‘end of term’.

Minimum term: The minimum amount of time that you can receive a certain interest rate on a term deposit.

TD: Term deposit.

Term: The length of time or duration a term deposit will run for.

Yield: The rate of return earned on an investment.

Term deposit account providers we research and rate

At the time of our 2016 Term Deposits Star Ratings, the term deposit providers we researched and rated include the following:

  1. ADCU
  2. AMP Bank
  3. ANZ
  4. Arab Bank Australia
  5. Bank Australia (formerly known as bankmecu)
  6. Bank of Melbourne
  7. Bank of Sydney
  8. BankSA
  9. BankVic
  10. Bankwest
  11. bcu
  12. Bendigo Bank
  13. Beyond Bank
  14. BOQ
  15. Cairns Penny
  16. Catalyst Money
  17. CBA Online Only
  18. Citibank
  19. Coastline Credit Union
  20. Commonwealth Bank
  21. Community First Credit Union
  22. CUA
  23. Defence Bank
  24. Delphi Bank
  25. ECU Australia
  26. Encompass Credit Union
  27. FCCS Credit Union
  28. G&C Mutual Bank
  29. Gateway Credit Union
  30. Greater Building Society
  31. Heritage Bank
  32. Holiday Coast Credit Union
  33. Horizon Credit Union
  34. HSBC
  35. Hume Bank
  36. Hunter United
  37. Illawarra Credit Union NSW
  38. IMB
  39. ING Direct
  40. Macquarie Credit Union
  41. ME (ME Bank)
  42. MyState
  43. NAB
  44. Newcastle Permanent
  45. Northern Beaches Credit Union
  46. P&N Bank
  47. People’s Choice Credit Union
  48. Police Bank
  49. Qantas Credit Union
  50. QBANK (formerly Queensland Police Credit Union (QPCU)
  51. QT Mutual Bank
  52. Quay Credit Union
  53. Queenslanders Credit Union
  54. Rabobank Australia
  55. RaboDirect
  56. Rural Bank Ltd
  57. Rural Bank ONE
  58. SCU
  59. Select Credit Union
  60. SERVICE ONE Alliance Bank
  61. St.George Bank
  62. Summerland Credit Union
  63. Suncorp Bank
  64. Teachers Mutual Bank
  65. The Capricornian
  66. The Mac
  67. The Mutual
  68. The Rock Building Society
  69. Transport Mutual Credit Union
  70. UBank
  71. Unicredit WA
  72. Victoria Teachers Mutual Bank
  73. Westpac
  74. Your Credit Union

For more information on how CANSTAR rates term deposits, read our latest star ratings report.

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