A term deposit is a savings account product that holds your money for a set amount of time, rewarding you with a fixed interest rate. If you apply for a six-month term deposit, your savings will be locked away for six months with a fixed interest rate. A six-month term deposit is a great way to save money, as you can't access it and spend it on impulse purchases. However, it's not the only short-term investment option available.
Learn more about how six-month term deposits in Australia work, the advantages of a six-month term deposit and how these compare with some other short-term savings accounts in this guide.
Compare 6 month term deposit rates
How do I choose a 6 month term deposit?
Jump to our comparison tool above and enter the amount you wish to invest into your term deposit. Usually the more money you deposit the better the interest rate will be. If you don't want a six-month term deposit, enter 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 "Go to site".
Is a 6 month term deposit the right short-term investment for you?
Six-month term deposits are a good way to earn a fixed interest rate on your money for a short period of time. However, term deposits typically offer better interest rates for longer term lengths, such as three to five year terms. An introductory savings account is another short-term savings option to consider. These accounts charge no fees and offer higher interest rates than six-month term deposits, as they offer bonus interest for the first four or five months after opening the account. However these rates are variable, meaning they could change, unlike term deposit rates which are fixed.
After the introductory period is over (usually after 4 or 5 months) the account will offer a lower interest rate, so you can withdraw your money and close the account or keep it for use as your day-to-day savings account. Or, you can transfer your money to a new introductory saver with a different bank and earn the bonus interest rate all over again!
Compare introductory savings accounts for short-term investments below
See how these interest rates above compare to some of the featured 6 month term deposit rates in the table below.
finder.com.au's featured 6 month term deposits
|Product||6 months p.a.|
|UBank Term Deposit||1.95% p.a.|
|Rabobank Online Savings Term Deposit||1.85% p.a.|
|St.George Term Deposit||1.45% p.a.|
|BoM Term Deposit||1.45% p.a.|
|Suncorp Term Deposit||1.85% p.a.|
Are you over 55 years old and looking for a flexible 6 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 2.55% 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 does a 6 month term deposit work?
If you open a six-month term deposit, you'll be tucking away your savings for half a year. Term deposits often offer a better interest rate than bank accounts and savings accounts as a reward for locking your money away. Remember, there are penalties for accessing your term deposit early so you need to make sure you won't need the money for a while.
Can I access my term deposit early?
There are new regulations in place that restrict your ability to access your term deposit early. In most cases, if you need to access the funds before your term deposit reaches maturity, a 31-day notice period applies. By imposing the 31-day notice rule, banks would be able to hold onto the funds until they could find new sources of capital. After the global financial crisis (GFC), many financial markets realised that banks did not have enough capital reserved 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 occur.
Interest payments for 6 month term deposits
Most six-month term deposits will pay your interest once the term matures – that is, after the six months have ended. In some cases you can have the interest paid on a monthly basis. However, this is more common with term deposits greater than 12 months in length.
You can select which bank account you'd like to receive you interest payments into. Some term deposits allow you to have interest paid into any Australian bank account, while others will require the interest to be paid into an account with the same financial institution.
How do I compare 6 month term deposits?
There's a number of factors to consider when comparing which six-month term deposit is right for you. Here are the main points to keep in mind:
The interest rate
Look for a competitive interest rate. Rates for six-month term deposits vary between banks, so make sure to compare options before you decide.
How often the interest is paid
With short-term deposits like the six-month term deposit, the interest earned on the balance is not likely to be deposited into the account until it reaches maturity. If you're looking to receive monthly interest payments, consider 12 month term deposits instead.
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 require a minimum investment amount of $5,000.
It's unusual to be charged account keeping or establishment fees on your six-month term deposit, so be sure to do your research and avoid paying unnecessary fees.
What are the pros and cons of a term deposit?
There are both advantages and disadvantages to six-month term deposits:
- Fixed interest rate. Term deposits provide a fixed interest rate, giving you peace of mind. You can work out exactly how much interest you'll earn when the term matures.
- 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.
- Six-month term deposits pay interest at maturity. This means that six-month term deposits may not be suited to all types of investors. For example, retirees may want a longer-term term deposit.
- Lack of liquidity. Even if you decided to pay the penalty and make an early withdrawal, you may have to provide notice to your financial institution, meaning it could be 31 days before you get your deposit back.
What are the risks of a 6 month term deposit?
Your term deposit is backed by the Australian Government guarantee scheme for amounts of up to $250,000 per person, per institution. This guarantee protects your deposits in the event of a financial crisis. 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) has made interest rate adjustments due to inflation, your new six-month term deposit may be at a lower interest rate.
- 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 admin fee, but the interest already earned may 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 three-month term deposit 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 6 month term deposit and a 12 month?
The interest rates vary from bank to bank and can also differ depending on the amount you deposit. With some banks the difference is a mere fraction such as an increase of 0.05% p.a, while with others it is a more significant 0.35% p.a. increase.
Is there an age restriction for who can open a 6 month term deposit?
Banks will apply their own restrictions depending on how their accounts are structured. Some banks enable Australians aged only 12 years old to open a six-month term deposit.
What do I need to open a 6 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.
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