A term deposit is a type of high interest savings account, except it locks your money away so you can't spend it until the term has matured. Term deposits have many advantages and they're a safe investment option with a competitive fixed interest rate that will not change until the term ends. Finding the best 3 month term deposit rate in Australia will help your investment grow.
Learn what a term deposit is and how it works in this guide, plus compare 3 month term deposit rates and savings accounts from a range of Australian financial institutions.
Term Deposit Offer
Bank of Sydney Term Deposit Online Exclusive
fixed for 3 months
Term Deposit Offer
$0 monthly account keeping fees. The Online Exclusive Term Deposit by Bank of Sydney offers term lengths from 1 month to 13 months. Withdraw funds before maturity without notice (fees apply).
What is a 3 month term deposit and how does it work?
A 3 month term deposit is a short-term savings product, where you lock your money away for the term period (3 months) and receive a fixed interest rate. The interest is calculated daily and paid to you at the end of the term. You can't touch the money without giving 31 days notice and forfeiting some of your interest. Term deposit lengths range from one month to five years, and you'll typically earn more interest on longer terms. For short-term savings goals of just a few months, you could also consider an introductory saver.
3 month term deposit versus an introductory savings account
Introductory savings accounts offer a competitive interest rate for 3 or 4 months after opening the account, often higher than what you can get with a 3 month term deposit (although the rates are variable, while term deposit rates are fixed). Like 3 month term deposits, introductory savers don't require you to meet any monthly deposit conditions and they don't charge any fees. After the 3 or 4 month introductory period, you can either withdraw your money and close the account, or you can keep the account for use as a regular savings account (note the interest rate won't be as high as it was during the introductory period).
Compare introductory savings accounts with bonus rates for a few months
Rates last updated January 19th, 2020
See how these interest rates compare to some of the featured 3 month term deposit rates in the table below.
Are you over 55 years old and looking for a flexible 3 month term deposit?
If you're over 55 years old and are looking for a flexible term deposit option, the Suncorp 55 Plus Account might be a good option to consider. This account offers the flexibility of an everyday transaction account, with the option to lock away only a portion of your balance and earn a higher fixed interest rate up to 1.60% p.a. You can still access the rest of your money in the account for day-to-day spending. Take a look at the Suncorp 55 Plus account here.
How do I compare 3 month term deposits?
Term deposits are flexible and allow you to structure them the way you want. If you decide that the shorter, 3 month term deposit is all you need, there are features you will want to consider when making your comparisons with different banks. Here are a few things to look for:
A competitive fixed interest rate
Different banks will offer different rates on their 3 month term deposits. In order to find the best rate for your 3 month term deposit you'll need to shop around and compare your options.
There are typically no establishment or account keeping fees with a 3 month term deposit, but you should check what the penalty is for an early withdrawal.
A minimum balance you can commit to
The amount you can invest into a 3 month term deposit does vary between banks, with some allowing deposits as low as $1,000, while others may require you to deposit at least $5,000. Keep in mind that these accounts are not only structured to pay a higher interest rate for longer terms, in some cases they may also offer higher interest rates for a higher balance.
Interest is paid when it suits you
As a result of the shorter term, with most 3 month term deposits you will receive your interest earnings once the account reaches maturity. Make sure the interest is paid daily so you can benefit from compound interest.
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Make sure you're comfortable with the length of your term deposit and that you won't need to access the money before the term expires. If you do need to withdraw early you'll not only have to pay a penalty, but the interest rate may be lowered as well.
If you think you can lock your money away for longer than three months, consider a longer term deposit instead. The longer the term length, the more you'll benefit from compound interest.
What are the risks of a term deposit?
As far as investments go, a 3 month term deposit is considered to be a low-risk way to increase savings. Your deposits up to $250,000 are guaranteed by the Australian Government. However, there are some things to avoid when using a 3 month term deposit as a place to hold your savings:
If you needed the money in your 3 month term deposit before the end of the term, you would have to pay some penalty fees to the bank. In addition, the interest rate may be changed to reflect the lower rate that a shorter term deposit has.
Although you do set the amount of time when choosing a 3 month term deposit, some banks will automatically roll the balance into a new term deposit if you don't let them know beforehand that you will be withdrawing your money. This means your new term deposit may be a lower interest rate.
What are the pros and cons of opening a term deposit?
Before locking your savings into a 3 month commitment, you should consider both the positive and negative points that this type of savings plan has to offer.
Competitive fixed interest rate. A 3 month term deposit should allow your money to grow at a rate that is slightly higher than a standard savings account interest rate.
Incentive to save. If you have a big expense in the near future the penalty for early withdrawal is a good incentive to leave the money alone until the term expires.
No account keeping fees. There are no account keeping fees when you save using a 3 month term deposit.
Minimum balance. Banks will typically have a minimum balance requirement. This varies from bank to bank making it an important feature to research first.
Interest paid at maturity. Unlike longer term deposits over 12 months in length, a 3 month term deposit will typically not pay you any interest until the account matures.
More questions about term deposits
The age requirements will vary by bank but someone as young as 12 can open a term deposit. Other requirements will include the applicant being an Australian permanent resident.
Yes, you will find 3 month term deposits that can be opened and then managed completely online.
Yes, when you open a 3 month term deposit account you will be required to make the deposit immediately.
You can only deposit money when first opening your term deposit, you can't top it up.
Yes! Most term deposits will calculate interest daily, meaning you'll earn interest on your interest.
Yes, you can use the 3 month term deposit calculator at the top of this guide to see how much your savings will grow.
Shirley Liu is Finder's global program manager. She was previously the publisher for banking and investments and has also written comparisons for energy, money transfers, Uber Eats and many other topics. Shirley has a Master of Commerce and a Bachelor of Media, Journalism and Communications from the University of New South Wales. She is passionate about helping people find the best deal for their needs.
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