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Are term deposits safe?

With fixed-interest rates and the backing of the government guarantee term deposits are one of the safest investments available, but there are still a few things to consider before opening one.

If you’re looking for a stable and secure investment opportunity, term deposits could be the perfect choice. They offer a fixed interest rate that won't change for the duration of the term (so you don't need to worry about any market volatility), and your deposit up to $250,000 is protected by the government.

How safe are term deposits?

Term deposits are one of the safest investments around. Unlike other investments, for example shares or property, there is almost no risk of losing the money you deposit. There are no establishment or ongoing service fees attached to term deposits (unless you withdraw your funds early), so you don’t have to worry about hidden fees and charges eating away at your savings balance.

These accounts allow you to earn a fixed interest rate on your account balance, so you don’t have to worry about falling interest rates harming your savings like you do with a savings account. This also means that you can calculate exactly how much interest you will earn on your term deposit, allowing you to budget for future expenses and investments ahead of time.

In short, term deposits are a safe place to park your money and let it grow. There’s no ongoing account management required and virtually no risk attached to your investment.

Term deposits and the Australian Government Guarantee

Similar to bank accounts and savings accounts, term deposits are protected by the Australian Government Guarantee. Under this arrangement, deposits of up to $250,000 in an Authorised Deposit-taking Institution (ADI) are guaranteed by the Australian government. In other words, if the bank with which you open a term deposit gets into financial trouble and collapses, you won’t lose any money as it'll be covered by the government. The majority of banks, building societies and credit unions are including in this scheme.

This $250,000 cap applies per person and per ADI. This means if you have $500,000 to invest, you can put half of it in a term deposit with one bank and the other half with another bank to make sure the whole lot is covered.

Term deposits you can open today

Promoted
Finder Award
5.35% p.a. for 12 months terms
Terms between 3 months and 5 years
$1000 minimum deposit
0.10% p.a. loyalty bonus when you roll over your term deposit

1 - 14 of 99
Name 3 Mths p.a. 4 Mths p.a. 5 Mths p.a. 6 Mths p.a. 7 Mths p.a. 12 Mths p.a. 24 Mths p.a.
Judo Bank Term Deposit
Finder Award$1,000 min. deposit
3 Mths p.a.
4.90%
4 Mths p.a.
-
5 Mths p.a.
-
6 Mths p.a.
5.05%
7 Mths p.a.
-
12 Mths p.a.
5.35%
24 Mths p.a.
5.35%
Go to siteMore Info
Bankwest Online Term Deposit
$1,000 min. deposit$5,000,000 max. deposit
3 Mths p.a.
3.75%
4 Mths p.a.
3.00%
5 Mths p.a.
3.00%
6 Mths p.a.
4.25%
7 Mths p.a.
4.00%
12 Mths p.a.
4.90%
24 Mths p.a.
4.85%
Go to siteMore Info
BCU Term Deposit
$1,000 min. deposit$999,999 max. deposit
3 Mths p.a.
4.35%
4 Mths p.a.
3.70%
5 Mths p.a.
3.40%
6 Mths p.a.
4.60%
7 Mths p.a.
4.55%
12 Mths p.a.
4.75%
24 Mths p.a.
4.40%
Go to siteMore Info
Community First Bank Term Deposit
$1,000,000 max. deposit
3 Mths p.a.
4.20%
4 Mths p.a.
4.20%
5 Mths p.a.
4.20%
6 Mths p.a.
4.25%
7 Mths p.a.
4.25%
12 Mths p.a.
5.25%
24 Mths p.a.
5.00%
Go to siteMore Info
Newcastle Permanent Term Deposit
$1,000 min. deposit
3 Mths p.a.
4.00%
4 Mths p.a.
3.00%
5 Mths p.a.
3.00%
6 Mths p.a.
4.10%
7 Mths p.a.
3.60%
12 Mths p.a.
5.10%
24 Mths p.a.
4.75%
More Info
Macquarie Bank Term Deposit
$5,000 min. deposit$1,000,000 max. deposit
3 Mths p.a.
4.85%
4 Mths p.a.
4.85%
5 Mths p.a.
-
6 Mths p.a.
4.95%
7 Mths p.a.
-
12 Mths p.a.
5.05%
24 Mths p.a.
5.00%
More Info
Rabobank Term Deposit
$1,000 min. deposit$2,000,000 max. deposit
3 Mths p.a.
4.80%
4 Mths p.a.
-
5 Mths p.a.
-
6 Mths p.a.
4.90%
7 Mths p.a.
-
12 Mths p.a.
5.10%
24 Mths p.a.
5.00%
More Info
Australian Unity Term Deposit
$5,000 min. deposit
3 Mths p.a.
4.55%
4 Mths p.a.
1.15%
5 Mths p.a.
1.15%
6 Mths p.a.
4.75%
7 Mths p.a.
1.50%
12 Mths p.a.
5.10%
24 Mths p.a.
4.20%
More Info
Great Southern Bank Term Deposit Account
$5,000 min. deposit$1,000,000 max. deposit
3 Mths p.a.
4.20%
4 Mths p.a.
2.95%
5 Mths p.a.
2.95%
6 Mths p.a.
4.60%
7 Mths p.a.
3.05%
12 Mths p.a.
4.85%
24 Mths p.a.
4.70%
More Info
Heritage Bank Term Deposit
$1,000 min. deposit$4,999 max. deposit
3 Mths p.a.
3.95%
4 Mths p.a.
3.60%
5 Mths p.a.
3.60%
6 Mths p.a.
4.85%
7 Mths p.a.
3.95%
12 Mths p.a.
5.00%
24 Mths p.a.
4.20%
More Info
ME Term Deposit
$5,000 min. deposit$2,000,000 max. deposit
3 Mths p.a.
2.25%
4 Mths p.a.
4.65%
5 Mths p.a.
1.25%
6 Mths p.a.
3.10%
7 Mths p.a.
5.10%
12 Mths p.a.
5.15%
24 Mths p.a.
4.30%
More Info
UniBank Term Deposit
$1,000 min. deposit$499,999 max. deposit
3 Mths p.a.
3.50%
4 Mths p.a.
3.50%
5 Mths p.a.
3.50%
6 Mths p.a.
4.00%
7 Mths p.a.
4.00%
12 Mths p.a.
5.00%
24 Mths p.a.
4.00%
More Info
Bendigo Bank Term Deposit - $5,000+
$5,000 min. deposit$5,000,000 max. deposit
3 Mths p.a.
3.50%
4 Mths p.a.
3.60%
5 Mths p.a.
3.00%
6 Mths p.a.
4.00%
7 Mths p.a.
3.00%
12 Mths p.a.
4.75%
24 Mths p.a.
4.00%
More Info
NAB Term Deposit
$5,000 min. deposit
3 Mths p.a.
3.50%
4 Mths p.a.
3.60%
5 Mths p.a.
3.70%
6 Mths p.a.
4.00%
7 Mths p.a.
4.00%
12 Mths p.a.
5.00%
24 Mths p.a.
4.00%
More Info
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Showing 14 of 99 results

Benefits of term deposits

There are several reasons why term deposits are so safe:

  • The interest rate is fixed. The interest rate on your account is fixed for the duration of the term, so even if the Reserve Bank lowers the official cash rate, your deposit won’t suffer.
  • Guaranteed returns. A fixed-interest rate means you know ahead of time exactly how much interest you will earn.
  • You can’t dip into your savings. There are access restrictions in place to make it difficult to withdraw your money before the deposit matures. That being said, you're free to access the money if you really need it.
  • There are no fees. There are no establishment or ongoing fees to chip away at your savings.
  • Your money is protected. Deposits of up to $250,000 are protected by the Australian Government Guarantee, which means there is basically no risk of losing your money.

Are there any term deposit risks?

Although term deposits are a safe and secure investment, they’re not without some drawbacks.

  • Your money is locked away. It can be costly to access your term deposit funds before your account has matured. Early withdrawals can incur fees and interest rate deductions. Also, you can’t top up your deposit with extra funds.
  • Advance notice required. Some banks require you to provide advance notice in writing (31 days on new deposits) if you want to withdraw funds before maturity. Keep this in mind if you’re ever likely to need urgent access to the money in your term deposit. This can also be a good thing though, as it means you can't access the money for impulse purchases.
  • Automatic rollover. Unless you specify otherwise, many banks will automatically rollover a matured term deposit into a new term deposit. The new account will feature the same investment term, which may no longer be suitable for you, and you will receive the current interest rate available from your bank for that specific term. However, there may be better rates available from other banks if you shop around, so make sure to compare your options before accepting an automatic rollover.
  • Higher interest rates available elsewhere. You may be able to access higher interest rates on other types of savings accounts, such as high interest savings accounts or bonus saver accounts.
  • You can’t take advantage of interest rate rises. While investing your money in a term deposit protects you against falling interest rates, it also means you can’t take advantage of any rate rises that occur. So if you lock your money away for an extended term, you run the risk of missing out on substantially better returns elsewhere.

More guides on Finder

  • Challenger Term Deposit

    Earn a competitive interest rate on terms between 1 month and 2 years with a Challenger term deposit.

  • ANZ Business Notice Term Deposit

    This account offers fixed interest rates for terms ranging from one month to five years, so you can enjoy secure, guaranteed returns on your business funds.

  • MOVE Bank Term Deposit

    With competitive interest rates and terms ranging from 3 to 24 months, a MOVE Bank Term Deposit can help you reach your financial goals.

  • BankVic Term Deposit

    Passively watch as your money grows in a high interest earning term deposit from BankVic

  • P&N Term Deposit

    A variety of terms to choose from along with interest payment options make the P&N Bank Term Deposits worth a closer look.

  • ING SMSF Term Deposit

    Take control of your super with a flexible account that allows you to manage all of your needs in one convenient place.

  • Teachers Mutual Bank Term Deposit

    Give your money the benefit of a high interest savings account boost with a flexible term deposit that allows you to structure the terms to meet your needs.

  • Rural Bank Term Deposit

    You can grow your savings quickly and easily by locking them into a term deposit from Rural Bank.

  • IMB Term Deposit

    With its relatively low opening balance, IMB’s term deposit could make it easy for Australians to begin making a positive investment towards their financial future.

  • Bendigo Bank term deposit (under $5000)

    Bendigo Bank term deposits can give you easy means to save for a short or long term goal. Though, you can find other similar offerings out there, so compare a few before deciding.

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8 Responses

    Default Gravatar
    marcelDecember 23, 2022

    HI there ,are term deposits the safest way the save? Can anybody hack in a term deposit account and commit fraud.
    Kind Regards
    marcel

      AvatarFinder
      AlisonFebruary 22, 2023Finder

      Hi Marcel,
      Term deposits are one of the safest ways to invest. Your deposit up to $250k in an Australian bank term deposit is protected by the government bank guarantee scheme.
      Like with any account you have, you need to keep your account information secure and not share passwords or log in details with anyone.
      Thanks,
      Alison

    Default Gravatar
    CinderellaFebruary 1, 2018

    How much does the Government Backed Guarantee cover?
    If I had more than that amount to invest, would that guarantee cover a second investment as well?

      Default Gravatar
      AshFebruary 16, 2018

      Hi Cinderella,

      Thank you for reaching out to us.

      The covered amount of the Government Guaranteed Scheme is $250,000 for every account-holder and every Authorised Deposit-taking Institutions (ADIs). If you have separate accounts with different protected institutions with less than $250,000 deposits, you will be covered for both accounts. In case you have $250,000 with two different “brands” but they’re operated under the same bank, you’ll only get $250,000 in total.

      You won’t be covered by the deposit amount over $250,000. You can learn more about the Australian Government Guarantee Scheme.

      I hope this helps.

      Please do not hesitate to reach out to us again if you have additional questions.

      Cheers,
      Ash

    Default Gravatar
    GarrySeptember 5, 2017

    If a married couple have a savings account with a balance of $600,000, is the government guarantee an amount of $250,000 EACH or $250,000 in total

      Default Gravatar
      DanielleSeptember 6, 2017

      Hi Garry,

      Thank you for contacting finder. We are a comparison website and general information service, we’re more than happy to offer general advice.

      The Australian Government guarantees deposits up to $250,000 in Authorised Deposit-taking Institutions (ADIs) such as banks, building societies or credit unions. This means that this money is guaranteed if the institution collapses. This cap applies per person and per ADI. You may refer to this page for more information https://www.finder.com.au/bank-protect-money.

      I hope this helps.

      Cheers,
      Danielle

    Default Gravatar
    CarmenAugust 21, 2017

    Hi

    If I have invested in 2 term deposit with 2 different banks are both accounts protected up to the $250000 govt guarantee per acct or is it only the one

      AvatarFinder
      MayAugust 22, 2017Finder

      Hi Carmen,

      Thank you for your inquiry.

      The $250,000 cap applies per person and per ADI (such as your bank, building society or credit union). If you have $250,000 deposit with one ADI and $250,000 with another, then both of your deposits are guaranteed. However, if you have multiple deposit accounts with “brands” that are owned by the same ADI (bank), the guarantee will only apply to $250,000 of these funds in total.

      So to make sure how much you’ll be guaranteed for, I would suggest that you check the ADI you bank with your two deposit accounts if they are one company or not.

      Hope this helps.

      Cheers,
      May

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