Short Term Deposits

Discover where you can find the best interest rates on short term deposits by comparing your options with Savvy today.

Last updated on July 1st, 2022 at 12:56 pm by Cate Cook

Compare short term deposits

A short term deposit can help you to maximise the interest you earn on your savings, but still allow you to access your funds after a short period.  If you’re looking for the best place to store your savings in the short-term, it’s easy to find and compare the best deposit options all in one place with Savvy.  We provide you with the tools to find the best short-term deals for your savings more easily.  Start comparing a range of offers with Savvy today.

site-logos Citi Term Deposit
  Maximum Rate Interest Rate Minimum Deposit Government Guarantee  
site-logos 2.25%
1 Year
1.00% $10,000 Yes
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$0 Set up and no ongoing account-keeping fees. Interest rate depends on balance amount. Optional 3,6,9 or 12 month terms. Balances from $10,000.

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More about comparing short term deposits

What are short term deposits?

Term deposits are an agreement between an investor and a financial institution to leave funds in a deposit account for a set period in return for a fixed rate of interest.  Short term deposits are classified as deposits 12 months and under.

Once you’ve agreed to the term of your deposit and lodged your funds, you can’t access your money until the agreed term is finished without incurring a penalty.  In return for offering certainty about how long your money will be locked away, you’ll receive a fixed interest rate.

Term deposits are offered by many financial institutions in 30-day blocks of time, with a different interest rate depending on the length and size of the deposit.  For example, a bank’s rate for a three-month (or 90-day) term deposit may be 1.30% p.a., whereas they may offer 2.50% p.a. if you agree to deposit your funds for six months.  The larger the amount of money you have to deposit and the longer you’re prepared to lock your money up, the better the rate you’ll be offered. 

For this reason, it’s important to compare term deposits with Savvy before deciding where to stash your cash.  Check back in with Savvy every time you have a new investment decision to make, as this way you’ll stay up to date with the latest interest rates and offers available.

When are short term deposits useful?

Short term deposits are useful for anyone who has savings and wants to earn interest on their nest-egg.  As long as you don’t need to use your money for other purposes for a set period, you can take out a term deposit for as long or as short a period as suits your lifestyle.

This type of investment may suit people in any of the following circumstances:

  • if you’ve saved up funds, such as for a house deposit, but don’t need to front up with the cash for another few weeks or months and wish to generate extra interest in the meantime
  • if you’re in between selling and buying your next home and have a large sum which you need to keep safe until your next property settlement date
  • if you’ve unexpectedly received a windfall, such as an inheritance, and need to park your funds for a short time whilst you seek longer-term financial advice
  • if you’re investing in an environment of rising interest rates and you don’t want to commit to a set interest rate for a long period
  • if you’re wanting to save aggressively and wish to lock your savings away to avoid the temptation to dig into them
  • if you have saved up a lump sum for a special purpose but don’t know how soon you might need it (for example, if you’re waiting for car sales to come around before committing to buy your new car)

In any of these circumstances and more, a term deposit could be the best answer to your short-term financial needs.

How do I compare short term deposits?

There are a few factors to take into consideration when choosing which financial institution to leave your funds with.  These are:

  • Interest rate – naturally, the higher the interest rate, the better to grow your savings
  • Terms – make sure the bank or financial institution you choose offers the term you’re after, as not all banks offer all lengths of time to invest your money
  • Withdrawal conditions – if you need to get to your money early, you’ll be charged an early exit penalty (on average $30 to $50) and will also lose some of the interest you otherwise would’ve earned, up to 90% in some cases. Compare penalty fees and interest reduction if there’s any chance you’ll need to access your funds early
  • Notice period – you’ll typically be required to give advance notice if you wish to withdraw your funds. This ranges from 14 days up to 31, so check out what your bank’s rules are before you commit your cash
  • Special offers – check out if there are any special offers available which suit what you’re looking for, as institutions frequently advertise specials to attract new customers.
  • Rollover bonus – some financial institutions offer a bonus on the advertised interest rate (often between 0.01% and 0.05% p.a.) if you roll over your funds into a second term deposit. Sometimes called a ‘loyalty bonus,’ this additional interest can help boost your savings even higher if you stick with the same bank and go in for a second term.

Here’s more of your questions about short term deposits

What is the minimum age to open a short term deposit?

Many financial institutions have a minimum age limit of 18 years to open a term deposit, but other term deposits are open to children as young as 13 to open one.  Check the individual conditions of whichever institution you choose if you are in the market to open a term deposit for a young person.

What different types of short term deposits are there?

Term deposits are available for all adults, pensioners and couples.  There are even term deposits available especially for businesses and self-managed super funds, which offer different interest rates from personal investments. Term deposits are available in a wide variety of terms up to five years, although short term deposits under 12 months are the most popular.  Longer term deposits may be more suitable for long-term investors rather than those just looking for the highest interest rate for their short-term savings, as well as in an environment where rates are falling.

How often will I receive the interest on my short term deposit?

You’ll be able to choose the frequency of when you receive your interest, either monthly, quarterly or at the end of your agreed term, although many institutions will only offer interest to be paid at maturity.  You’ll typically receive a slightly higher interest rate if you choose to receive it less often, which is done to compensate for a lack of compounding, so it’ll likely work out to be roughly the same return.

What are the advantages of a short term deposit over a savings account?

The advantages of a term deposit over a savings account are that you’ll earn a higher rate of interest on your savings, and your nest-egg will remain locked away safe, without any temptation to raid your savings when the sales are on.  You’ll also be protected from interest rate falls and be able to budget accurately into the future with a fixed interest rate on your savings.

What happens at the end of a short term deposit?

At the end of your term, you can decide whether to roll over your funds into another term deposit or transfer them to another transaction or savings account so you can access them.  If you do transfer them to a transaction account, you’ll be able to access your money via. your linked debit card. Whatever you decide to do, once your agreed term is up, you’ll have to take some sort of action: you can’t just leave your savings in place once your term is over.