Compare Term Deposits

How to compare term deposits

Things to consider when comparing

A term deposit is a type of account that allows you to save with a fixed rate of interest. You can decide how much you want to save and for what length of time, and then throughout the term you will earn a specified rate of interest.

The first thing you will need to think about is how long you want to save for, and how much you want to invest. Some providers will ask for a minimum amount to be invested, and there may be a maximum amount as well, while terms last anywhere from one month to five years and more. Shop around to find the most suitable option for your needs. You will usually find that you will get a higher rate of interest if you invest more over a longer term, but this is not always the case.

Remember that your money is essentially going to be locked away for a certain period of time. The idea behind a term deposit is that you leave your money in the account to accumulate interest. Some term deposits will penalise you for early withdrawals, sometimes by lowering the interest rate on your investment, or sometimes by charging you a fee.

This can be a great incentive to not spend your money. If you tend to give in to temptation too easily, a monetary penalty could stop you from doing this. However, if you think you may need early access to your investment, first think about choosing a shorter term, or alternatively, choose an account that will not charge you for early withdrawals.

To help you choose the best term deposit, have a look at some things you should think about before signing up.

Interest Rates:

One of the first things to look at is the interest your savings will earn. You want to get the maximum return on your money, so try to find a term deposit that offers the highest interest rates. Check out what's on offer at online-only companies, credit unions and smaller providers, as they often offer much better rates than the bigger banks.

Term Length:

It is important to think about how long you want your term deposit to last for. Your money will basically be locked away for that time, so think about your future and if you are likely to need the money soon. However, you may find that longer terms yield higher returns, as the interest offered is usually higher.

Amount to be Invested:

Again, you may find that the more you invest, the more you can expect back in interest. Think about how much you can afford to save. If it suits you better, you can choose to open more than one term deposit, allowing you to add to your savings over time.

Penalties:

You may be charged for making early withdrawals from the term deposit. Find out what these penalties are. While they may be a good deterrent, you may prefer an account that will not penalise you.