Finding the best term deposit rate for 3 months will help you meet your short-term savings goals.
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 from a range of Australian financial institutions.
fixed for 3 months
Term Deposit Offer
Enjoy a competitive interest rate and guaranteed returns on balances from $100,000 with a Citibank Term Deposit Account. Plus, pay no account keeping fees.
- Minimum investment: $100,000.00
- Monthly fees: $0.00
- Interest payment options: annually or at maturity
Compare 3 month term deposit rates
What is a 3 month term deposit and how does it work?
Term deposits are accounts that typically offer a higher rate of interest the longer you keep the money in the account. You can choose a term length from one month to five years with most banks, but note that you can't access your money until the term length is over. If you really need to make a withdrawal before your term deposit has matured you'll need to give at least 31 days notice and you may need to pay a penalty.
A 3 month term deposit is a short-term savings product, where the interest is calculated daily and paid to you at the end of the term. This means you'll benefit from compound interest. With some banks, a 3 month term deposit will roll over into a new one when the term comes to an end unless you have notified the bank of your intention to withdraw your savings beforehand.
finder.com.au's featured 3 month term deposits
|Term deposit||3 Months p.a.|
|UBank||2.70% p.a. (at maturity)|
|RaboDirect||2.30% p.a. (at maturity)|
|St.George||2.05% p.a. (at maturity)|
|Bank of Melbourne||2.05% p.a. (at maturity)|
|BankSA||2.05% p.a. (at maturity)|
|Commonwealth Bank||1.75% p.a.|
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.
finder.com.au's top tip
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.
- Automatic rollover
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
You may also be interested in
Choose a term from one month to five years and earn a fixed interest rate of up to 2.90% p.a. This account is for Queenslanders only. Read more…
If you struggle to save, you could benefit from a savings account that won’t allow you to withdraw funds. Read more…
Find out all about the tax treatment of term deposit interest payments. Read more…
With high interest rates offered in a variety of different terms, the AMP term deposit could be ideal for both short and long term saving goals. Read more…
The Citibank Term Deposit and Investment offer $100,000+ is well worth a look for anyone who has a large sum to invest and wants to split their balance between a term deposit and various investment products. Read more…