
Savings and term deposit accounts are both used to save money, but what makes them different? Let’s break them down to see which one could best suit your needs.
Term deposits
A term deposit generally takes more of a set-and-forget approach to savings. It offers a fixed interest rate for a period of time, otherwise known as the ‘term’, that you choose. The term can range from a month to several years, and you’ll usually find that the longer the term, the higher the interest rate.
Typically, term deposits offer a higher interest rate than savings accounts– but you can’t access the money in it until the term is up without paying a penalty. This means they’re not for everyone. You also usually need to have some savings already to be able to open a term deposit – for example, at BCU Bank the minimum opening balance on a Standard Term Deposit is $1,000.
Term deposits are all about low maintenance and guaranteed returns, making it an ideal option for savers with longer term savings goals.
Savings accounts
A staple for seasoned and new savers alike, a savings account allows you to earn a better rate of interest on your balance, unlike an everyday transaction account. They can encourage regular saving by paying bonus interest if certain criteria are met, such as depositing a minimum amount every month and not making any withdrawals. Other accounts may reward you for both spending and saving, like our Boss Saver Account.
With savings accounts, it’s all about flexibility and easy access to your money. This type of account is perfect for shorter term savings goals, like an ‘emergency’ fund or a holiday, or if you are a consistent saver.
Deciding what’s best for you
So, how do you choose? Simply put, it should come down to whether you prefer flexibility or certainty.
Term deposits are a great option for savers wanting to know exactly what their return will be, and that their money will be safely out of reach. Bear in mind that the certainty of guaranteed returns comes at the expense of flexibility. Your funds will be locked away until the end of your term, so you won’t be able to dip into or add to your term deposit balance until the term ends.
Savings accounts are great for regular saving and the peace of mind that you’ll be able to access your savings balance from time to time. The flexibility of a variable interest rate can also be beneficial to helping your balance grow.
At BCU Bank both options are secure, thanks to the Financial Claims Scheme (FCS). The FCS ensures certain deposits are protected up to a limit of $250,000 for each account holder.
Reader reminder: None of BCU Bank’s savings or term deposit accounts charge a monthly fee.
Still not sure?
There’s a lot of options to choose from, we get it. Our Savings and Term Deposit Calculator is a handy tool to use when you’re wanting to get your savings in order. Change the term length, account type, opening balance and deposit frequency, to simply see how much your money can grow.
If you need help finding the right account for you, you can visit your local BCU Bank branch or speak with a member of our team today.
Important information
Banking and Credit products issued by Police & Nurses Limited (BCU Bank).
Any advice does not take into account your objectives, financial situation or needs. Read the relevant terms and conditions, before downloading apps or acquiring any product, in considering and deciding whether it is right for you. The Target Market Determinations (TMDs) are available on our website or upon request.