A six month term deposit is more suited for short-to-medium term investments.
A term deposit is a saving account product that holds your money for a set amount of time, rewarding you with a fixed interest rate. If you apply for a 6 month term deposit, your savings will be locked for 6 months with a competitive interest rate.
If you wish to access your term deposit before the 6 month has finished, you are usually charged a penalty. This could defeat the purpose of investing in a term deposit from the start.
Compare 6 month term deposits below
How do I choose a term deposit on your site?
Jump to our comparison tool and enter in the amount you wish to invest into your term deposit. Indicate the number of months you want to invest for and click "calculate". Our tool will automatically calculate the interest you can earn as a general indication. If you wish to apply or to find out more, click on "Open".
finder.com.au's featured 6 month term deposits
|Product||6 Months p.a.|
|UBank Term Deposit||2.85% p.a.|
|RaboDirect Term Deposit||2.85% p.a.|
|St.George Term Deposit||2.30% p.a.|
|BoM Term Deposit||2.30% p.a.|
|Citibank Term Deposit ($75k)||2.95% p.a.|
How does a 6 month term deposit work?
If you choose to apply for a 6 month deposit, you'll be tucking away your savings for half a year. Remember, there are penalties for accessing your term deposit early so you need to make sure you won't need the funds for a while.
There are also new regulations in place that impose new restrictions on accessing your term deposit early. There is now a 31 days notice period if you would like to access your term deposit early, with the exception of the ANZ term deposit (as they have the ANZ Advance Notice term deposit available for a higher rate).
In some cases, you can have the interest paid on a monthly basis but these are more common with term deposits that have a maturity term for more than 12 months.
Case study: Jamie invests in a 6 month term deposit
Jamie invests in a new term deposit in January which means it's due to mature in July. However, it is now March and he's come across an emergency and needs to access the funds now. He notifies his bank that he needs to access the funds, but the new restrictions in place will mean he can't access the funds until April.
He is also charged a penalty for access his funds early.
Why were these restrictions imposed?
After the Global Financial Crisis (GFC) many financial markets realised that banks did not have enough capital reserves to survive another economic crisis. Australia isn't the only country that's affected; many economies around the world have implemented new rules to ensure banks have enough reserves in case another crisis were to come.
By imposing the 31 days notice rule, banks would be able to hold onto the funds until they could find new sources for reserves.
How do I compare 6 month term deposits?
The amount of interest you will receive
This is very important if your goal is to build on your savings while it is in a term deposit account. Competitive rates are going to be different depending on which financial institution you are looking at.
How often the interest is paid
With short term term deposits like the six month, the interest earned on the balance is not likely to be deposited into the account until it reaches maturity. However, retirees may be looking for a longer term term deposit so take advantage of monthly interest payments.
The minimum amount required for investment
You will need to check the minimum balance requirements of various banks, as some will allow for $1,000 deposits while others will insist that you invest at least $5,000.
In most instances you are going to find no account keeping or establishment fees with a term deposit for six month; don't waste your money on fees.
What are the benefits and drawbacks of a term deposit?
There are both good and bad points with a term deposit for six months that you should be aware of before making the final decision to invest your savings into one:
- Fixed interest rate. Term deposits provide a fixed interest rate giving you peace of mind. In a low or uncertain interest rate environment, having this peace of mind can be emotionally rewarding.
- It encourages forced savings. With penalties for any early withdrawals, this type of account provides you with an incentive to keep your money where it is until the goal is met.
- 6 month term deposits only give you interest at maturity. This means that 6 month term deposits may not be suited to all types of investors. For examples, retirees may want a longer term term deposit.
- Lack of liquidity (also a risk!). Even if you decided to pay the penalty and make an early withdrawal for an emergency, you might have to first give the financial institution notice, which could be 31 days before they give you your deposit back.
What are the risks?
Your term deposit is backed by the Australian Government guarantee scheme for amounts of up to $250,000 per person, per institution. This guarantee only protects your deposits in the event of a Financial Crisis and does not protect you if you wish to access your funds early. You should also look out for the following:
- The terms and conditions when rolling your term deposit over. In most cases the account will simply roll over with the same set of terms if you do not inform the financial institution of your intent. If the Reserve Bank of Australia (RBA) had made interest rate adjustments due to inflation, the 6 months term deposit may no longer be a worthwhile investment.
- Have a back-up for emergency funds. The penalty fee is applied when you ask for the deposit back before the end of the term. Not only will you be charged an administrative fee, but the interest already earned will be adjusted to match that of a term deposit with a shorter term.
With term deposits for six months you need to think about when you will need to access the money. Consider a shorter term if you don’t think you can make it the full six months or a longer one with a higher interest rate if you can go without your savings for an extended period of time.
Did you have these questions about term deposits?
How much of a difference in interest is there between a six month term deposit and a twelve month?
The interest rates vary from bank to bank and can also differ depending on the amount of your savings investment. With some banks the difference is a mere fraction such as an increase of 0.05% per annum (p.a.) while with others it is more a more significant 0.35% p.a. increase.
Is there an age restriction for who can open a six month term deposit?
Banks will impose their own restrictions depending on how their accounts are structured, but you will find that with some, an Australian young person of only 12 years old could open a six months term deposit.
What do I need to open a six month term deposit?
You will need to be able to provide proof of your identity along with the money you plan on depositing into the account when you apply. With some banks you can even apply online and transfer the initial deposit from your transaction account.