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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.
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.
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.
There are several reasons why term deposits are so safe:
Although term deposits are a safe and secure investment, they’re not without some drawbacks.
Earn a special fixed interest rate for terms of 1 or 2 years in length when you invest at least $25,000.
Earn a fixed interest rate on a wide choice of terms with a Gateway Bank personal term deposit.
Earn a competitive fixed interest rate on Citibank term deposit when you invest $10,000 or more.
Earn a competitive interest rate plus bonus interest when you roll over your deposit into a new term deposit. Terms from 3 months to 5 years. No fees.
Earn a competitive interest rate on terms between 1 month and 2 years with a Challenger 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.
Choose a term from one month to five years and earn a competitive, fixed interest rate on your deposit. This account is for Queenslanders only.
If you struggle to save, you could benefit from a savings account that won’t allow you to withdraw funds.
Find out all about the tax treatment of term deposit interest payments.
Earn a competitive interest rate on deposits over $100,000 and enjoy flexible term lengths with the AMP Bank term deposit.
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?
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
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
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
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
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