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$1,000

5.00%

for 6 months

4.95%

for 12 months

    2024 Award Winner

  • 6 months
  • Automatic maturity rollover
  • Joint application available
  • Maturity alert by email

$1,000

4.10%

for 6 months

4.90%

for 12 months

  • 6 months
  • Automatic maturity rollover
  • Joint application available
  • Maturity alert by email

$5,000

3.25%

for 6 months

3.78%

for 24 months

  • 6 months
  • Automatic maturity rollover
  • Joint application available
  • Maturity alert by email

$5,000

3.75%

for 6 months

4.25%

for 12 months

Term Deposit
  • 6 months
  • Automatic maturity rollover
  • Joint application available
  • Maturity alert by email

$5,000

4.20%

for 6 months

4.90%

for 12 months

Term Deposit - Special
  • 6 months
  • Automatic maturity rollover
  • Joint application available
  • Maturity alert by email

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Looking for a short-term investment option? If you’re confident you can afford to lock away your savings for six months or more, you could start by looking for a competitive interest rate on a six-month term deposit. 

A short-term deposit could help you work out how your lifestyle may be affected by living without direct access to your savings. By the end of the six months, you’ll know if you’re ready to invest your money for a longer period of time. 

What is a six-month term deposit?

As the name implies, a six-month term deposit allows you to invest your money for six months. The money you invest is your deposit, and the length of time you keep it invested with a bank, credit union or building society is the term. 

During this investment period, you will not have easy access to this money, unless you’re willing to pay a penalty fee for early access. However, you will earn interest on your deposit at a fixed interest rate, growing your wealth over time. 

Because you’ll know your term length and fixed interest rate, it’s possible to calculate how much interest you can earn on a term deposit ahead of time. This can be helpful when it comes to organising your budget. 

When is interest paid on a six-month deposit?

When it comes to term deposits, the timing of interest payments can vary based on the provider and the specific terms of the deposit. Typically, interest can be paid monthly, quarterly, semi-annually, annually, or at maturity. However, for shorter-term deposits, some providers may only offer to pay interest at the end of the term. 

Choosing more frequent interest payments could also lead to lower interest rates compared to receiving the interest at maturity, as providers may adjust the rates to account for the more frequent payouts. 

What happens after the six-month period?

At the end of a six-month term deposit, when your deposit “reaches maturity”, you have several options for your money. If no action is taken, many banks will automatically roll over your deposit into a new term, potentially at a different interest rate. However, you can also choose to move your funds to another bank, reinvest in a different term deposit with the same bank, or withdraw your money. 

It’s easy to leave your money where it is, especially if the end of your term deposit catches you by surprise. While banks typically notify you that you’re approaching the end of your term deposit, it’s wise to make a personal note of the date. This allows you to review your options and make informed decisions about reinvesting or withdrawing your funds, ensuring your financial strategy remains aligned with your goals. 

What if I need my money earlier?

If you want to withdraw money from your term deposit before the end of your term, you’ll likely need to pay a fee. Consider checking the details of any penalty or breakage fees before you sign up for a six-month term deposit, as this amount may vary depending on the size of your investment. You may also receive less interest if you withdraw money early from a term deposit. 

Many banks also require advance notice (e.g. 31 days) if you want to withdraw funds from a term deposit before maturity. So make sure to compare different term deposits and read the product disclosure statements carefully. 

Savings account vs six-month term deposit

A six-month term deposit may be a secure place to park your money in the short term, offering the benefit of fixed interest rates. 

While a term deposit ensures you know exactly how much interest you’ll earn, it also means your money will be locked away for the duration of the term. This means you won’t be able to access your money for six months and may need to pay a penalty for early withdrawal. 

While this could be a drawback in an emergency situation, it can be helpful for someone who wants to save for a goal, especially if they have difficulty controlling impulse spending. 

In comparison, savings accounts typically offer high liquidity and flexibility. You can generally deposit and withdraw funds anytime without paying penalties, making this money available for managing day-to-day expenses and emergencies. 

It’s worth remembering that the interest rate on a savings account is variable, leading to unpredictable earnings. Additionally, the interest rate may be lower compared to a term deposit. Among different savings accounts, some may offer higher rates, but these could be conditional on maintaining a minimum monthly balance or limiting the number of withdrawals. 

Is a six-month term deposit right for me?

A six-month term deposit can strike a good balance between earning interest and maintaining some flexibility. If you find a term deposit with a competitive interest rate, you can invest your savings and potentially reinvest the interest every six months to continue growing your wealth. And if you compare term deposits and find that there are better options for you out there, you won’t have to wait as long for your current term to end before switching. 

Generally, the longer the term deposit, the higher the interest rate you may be offered. While you can likely still find good interest rates for six-month term deposits, some of the highest term deposit interest rates may only be available for term deposits of 12 months or longer. To maximise your earnings, compare the interest rates and term length of various deposits and calculate the potential interest in advance. 

Some six-month special term deposits have introductory offers for new customers, such as higher interest rates. However, these special bonuses are often only available for a limited time. For example, when your six-month special term deposit reaches maturity, if you choose to roll it over for another term, you may be switched onto a lower rate. Compare different term deposits to work out which offers may best suit your situation. 

Fact Checked

This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

Frequently Asked Questions

Can you add money to a term deposit?

When you open a term deposit, you agree to lock your money away for a set period and earn a fixed amount of interest during that period.

Where everyday transaction accounts give you the flexibility to deposit and withdraw funds as frequently as you like, term deposits trade flexibility for higher interest rates.

Once your funds are deposited in a term deposit, they’re fixed for the length of the term, meaning you can’t add additional funds midway through the term.

When the term deposit matures, you may have the option to add additional funds and roll the funds over for another term, or you may choose to withdraw the money at that point.

If you have extra funds to invest, you could consider opening an additional short term deposit account or a high-interest savings account.

It’s worth noting that you can withdraw the funds midway through the term, but a penalty is likely to apply.

What is a term deposit rate?

The term deposit rate is the agreed interest rate for your term deposit. It remains fixed for the term of the deposit.

For example, if you deposit $5,000 for 12 months at a 2.5 per cent term deposit rate, that 2.5 per cent term deposit rate will be fixed for the entire 12 months and won’t change until the term matures.

The term deposit rate is one of the most important factors to consider when comparing your term deposit options. The general rule of thumb is that the longer the term, the higher the term deposit rate.

Term deposits are a popular type of investment because they’re safe and provide reliable returns.

The return you get on your term deposit will be determined by the amount you initially invest, the amount of time you choose to invest it for, and the term deposit rate.

Are term deposits compounded?

Term deposits can be compounded, depending on what you choose to do with the interest.

There are two ways to receive interest from a term deposit: either a lump sum at maturity; or paid on a regular basis, usually monthly. If you get your interest paid regularly, you can get it paid into a transaction account, or back into the term deposit account. By using this second option, you’re getting interest paid on your interest. In other words, it’s compounding.

Having the money paid into a transaction account means you can access it for your day-to-day spending, while compounding the interest means you get a better overall return on your investment. Both have advantages, depending on your needs, but be aware that some term deposit accounts that pay interest regularly may offer a lower interest rate to offset the effect of compounding.

What is a short term deposit?

Sometimes you only want to tie up your money for a short period, maybe because you want to make a quick return on a large sum, or just to have more flexibility and access to your money. That’s where a short term deposit can come in.

Short term deposits are usually less than 12 months (e.g. 30 days, 90 days, six months or 12 months), though you will still not be able to access your money for the length of the term without incurring a penalty fee.

At the end of the term, you can roll your deposit over, or you can withdraw it. An advantage of short term deposits is that you can take advantage of higher interest rates with a different financial institution, if they are available.

What is a term deposit account in a bank?

A term deposit account in a bank is a type of investment where you lock away a portion of your savings for a fixed period in return for earning a set amount of interest.

Opening a term deposit account in a bank is a safe way to earn a stable return on your investment of cash.

Term deposit accounts can be a good way to give your savings an extra boost without the need to actively watch or manage your funds during the term of the deposit.

Term deposit accounts in a bank are a popular type of investment because they’re safe and there’s very little risk that you could lose your money.

If you make a term deposit of up to $250,000 with an authorised deposit-taking institution, it’s guaranteed by the Australian government, which means there’s virtually no risk of losing your money and you’re guaranteed return.

Interest rates vary depending on the length of the term, the amount you deposit and the bank you choose.

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^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, target market determination fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.