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6 ways to get the best term deposit rate


Man in cafe working on laptop. There are plenty of ways to maximise your term deposit rate and get yourself a better return, even in this low-rate environment.'s Smart savings guide is presented by Judo Bank, the new Aussie challenger bank. Earn a competitive, fixed interest rate with no account fees on your term deposit with eligible balances up to $250,000 guaranteed by the Australian Government. Learn more.

If you're looking for safe ways to put your money to work, term deposits are a great, low-risk investment option. Unlike the interest offered on a high interest savings account that could change at any time, or the unpredictable, volatile nature of the sharemarket, term deposits offer fixed interest rates so you know exactly how much you'll be earning on your deposit for the life of the term.

While term deposits offer fixed interest rates, this doesn't mean you have no control over what you're earning. Here are six easy ways to make sure you're getting a great term deposit rate on your investment.

1. Consider a smaller bank

The big banks are often the first to come to mind for most financial products, from your standard everyday transaction account to your home loan. However, bigger doesn't always mean better. Often the community banks, credit unions and challenger banks will offer more competitive interest rates as they compete for a slice of the pie. Plus, these smaller players often have fewer overheads to pay, so they can afford to offer better rates to customers.

2. Look for loyalty bonuses

It's not often that a bank rewards you for being loyal. It's common to see banks offer more competitive interest rates on term deposits and savings accounts for new customers, to entice people to switch. However, some banks do offer loyalty bonuses to term deposit customers as an incentive to keep their money invested for another term.

For example, Judo Bank offers an additional 0.10% bonus interest on top of the current advertised interest rate if you choose to roll over your maturing term deposit into a new one. Not only will this earn you a bigger return on your investment, but sticking with the same bank also saves you the hassle of switching your account to another provider.

3. Opt for a longer term length

Banks usually offer more competitive interest rates on longer term lengths. They like to know they have access to the money for longer periods of time; it helps manage their own cash flow as they play a balancing act between the money coming in as deposits and the money going out in the form of loans.

If you don't need to access the money for anything in particular in the near future, instead of a 12-month term consider increasing your term length to 3, 4 or even 5 years. And in exchange for you locking your money away for longer, you'll often be rewarded with a higher interest rate for the life of the term. However, don't commit to a five year term unless you know you don't need the money before it reaches maturity. If you do need to withdraw early you'll likely be penalised with an early withdrawal fee, a reduced interest rate, or both.

4. Negotiate with the bank

A lot of us wouldn't think twice about calling our home loan lender and asking for a better deal or negotiating a better loan on a new car. So why not do it with your term deposit, too? Often with a deposit product, people don't think they have the right to negotiate like they do with a loan. But everything is negotiable. Everything!

Remember, the bank wants you to open a term deposit with them. It's in their interest for you to do so, especially if you've got a sizable amount to invest. Banks rely on consumer deposits in order to provide loans to other customers. Without those consumer deposits, they wouldn't be able to offer loans. So before you settle for the advertised term deposit rate, give the bank a call and ask if they can sweeten the deal with a better fixed rate. Saying you'll increase your deposit amount or you'll switch to a longer term length might help get them over the line.

5. Reconsider your interest payments

When you invest in a term deposit you'll usually get to select how often you receive your interest payments, especially for longer terms. For example, you could get the option to receive your interest monthly, quarterly, annually or in one lump sum when the term reaches maturity.

Usually if banks offer a higher interest rate, it's for terms with interest paid at maturity. Making this simple switch could see your term deposit rate increase by 0.10% or even more.

6. Ask about rate-matching

Price matching between competitors is something we've come to expect from big homeware, tech and electrical retailers. We're all familiar with the classic "we'll beat it by 10%" marketing slogan. But have you ever thought about doing this with your bank?

If you find a better term deposit rate in the market, some banks will be happy to match, or even beat, the rate if you open a term deposit with them instead. But like tip number one, if you don't ask you won't receive.

Now that you know how to get a great rate, compare term deposits and put these tips into action.


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