Is a term deposit right for your savings?
If you have a savings goal, a term deposit can offer a low-risk way to invest your money and earn a fixed rate of interest.
They can be useful when saving for a big goal, like a car or a house deposit, or when you want an investment that’s protected from market changes.
If you need to access your savings regularly, consider a savings account.
WHY USE A TERM DEPOSIT?
Term deposits are a low-risk way to invest your savings. Your money is locked away for the length of time that you choose (the term), usually between one month and three years. This can be helpful if you’re likely to dip into your savings for impulse purchases.
Term deposits usually offer a higher rate of interest than most savings accounts and the more money you put in, or the longer the term, the more interest you’ll earn. The fixed rate means you’ll always know what your investment is worth.
Our savings and term deposit calculator can help you to calculate how long it would take to save for a specific goal and also show you how much your savings could grow over time with a term deposit. BCU Bank members can track their term deposit in the BCU Bank app or on BCU iBank.
You'll also have peace of mind knowing that deposits of up to $250,000 in total are protected by the Australian Government’s Financial Claims Scheme.
CHOOSING A TERM DEPOSIT
When selecting a term deposit, there are several questions you should consider, including:
- Is the interest rate competitive?
- Is the interest paid monthly, quarterly, annually, or at maturity?
- How long do you want to invest for?
- Is the interest rate higher for a longer term or a larger investment amount?
- What is the minimum balance amount?
- Are there any fees?
- What is the penalty if you need to withdraw your money early?
- What happens when the term deposit reaches maturity?
WHAT TO DO WHEN YOUR TERM DEPOSIT MATURES
When a term deposit matures, your investment is complete, and any access restrictions applied during the term are lifted. This means you could reinvest in another term deposit, invest it elsewhere, or withdraw part or all the funds to use however you’d like. If we don’t hear from you, the term deposit will automatically renew for the same term length at the interest rate that is available on the maturity date.
Set a reminder to review your term deposit a couple of weeks before it matures. It’s a good time to consider your progress towards your savings goal, your financial situation, and your plans for the next few years.