Home > Term Deposits > Short Term Deposits
Last updated on July 1st, 2022 at 12:56 pm by Cate Cook
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.
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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.More details |
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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.
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:
In any of these circumstances and more, a term deposit could be the best answer to your short-term financial needs.
There are a few factors to take into consideration when choosing which financial institution to leave your funds with. These are:
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.
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.
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.
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.
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.
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