Long-term deposits versus short-term deposits

So you’re sold on the idea of a term deposit, but what's the optimal amount of time to lock your funds away for?

Long-term deposit

A long-term deposit usually means a term that is over 12 months in length. The main advantage to long-term deposits is they generally have a better interest rate. Typically, the longer amount of time you commit to, the better rate you will receive from the lender. This is a reward for letting them hold onto your money for a long period of time. Long-term deposits require less maintenance as they allow you to set and forget, which is a quality many people look for in an investment.

Short-term deposit

Deposits that are locked in for 1-12 months are usually considered short term. The benefit of short-term deposits is, as the name suggests, they are short term. Many people will not be comfortable knowing they cannot access that money for several years. If you end up with a large unexpected cost, and the bulk of your money is locked away, you could run into financial trouble. Also, when the term ends, you have the opportunity to shop around the market for a better rate, whereas with a long-term deposit you need to wait it out. Some banks may offer you a loyalty bonus if you roll over your term deposit when the term ends.

Which term deposit suits you best?

If you have a short-term savings goal, a short-term deposit may be your best choice. For example, if you’re planning to go on an overseas trip in 12 months or need to purchase a car next year, a short-term deposit is a good way to make sure you don’t spend your money in the interim. It is also suited for first-time investors, who may be nervous about committing to anything long term or who may not have other forms of equity or assets to bail them out in an emergency. Long-term deposits are suited to people who may have more cash or assets and are more comfortable with locking some of it away for a few years. If an emergency comes up, they know they will have access to enough money to deal with it. It is also suited for people who are looking for a long-term investment strategy, and already have, or a planning to have, a diversified investment portfolio.

Term Deposit Offer

UBank Term Deposit Account

1.70 % p.a.

fixed for 6 months

Term Deposit Offer

Customers who reinvest their term deposit upon maturity receive a 0.10% loyalty bonus.
The 5 and 7 month terms are UBank's Green Term Deposits, where your money will be matched to a portfolio of renewable energy projects.

  • Minimum investment: $1,000.00
  • Monthly fees: $0.00
  • Interest payment options: Maturity
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How can I compare term deposits?

If you’ve decided what length term deposit best suits your savings needs, the next step is to compare the term deposits available.

Rates last updated October 18th, 2019
$
Name Product 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. Product Description Interest Earned
UBank Term Deposit Account
1.70%
1.70%
1.70%
1.70%
1.70%
1.60%
-
Customers who reinvest their term deposit upon maturity receive a 0.10% loyalty bonus.
The 5 and 7 month terms are UBank's Green Term Deposits, where your money will be matched to a portfolio of renewable energy projects.
MyState Bank Online Term Deposit
1.70%
1.65%
1.40%
1.50%
1.40%
1.35%
1.30%
Single or joint account-holders can apply online with MyState's online application process.
The MyState Bank Online Term Deposit has a choice of term lengths. Interest is paid upon maturity of the term deposit.
Citibank Term Deposit 250K
2.00%
-
-
1.80%
-
-
-
A short-term investment option with a guaranteed rate of return.
Suited to customers with deposits over $250,000.
Judo Bank Term Deposit
-
-
-
2.35%
-
2.15%
2.20%
Earn a 0.10% p.a. loyalty bonus when you roll over your term.
The Judo Bank Term Deposit term lengths range from six months to five years. Minimum opening deposit is $1,000. No account-keeping or set-up fees to pay.

Compare up to 4 providers

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