Tuck your savings away in a 9 month term deposit and you could look forward to a fixed interest rate period that's not too long and not too short.
A term deposit allows you to keep your savings safe for a specified amount of time, while it is earning interest at a competitive rate.
With a nine month term deposit you could rest easy knowing that during that time you are building on your savings balance while not having the opportunity to take from it.
How does a 9 month term deposit work?
A term deposit is structured the way you need it to be, providing a variety of options including the length of the terms. You can find some that are as short as 30 days, while others will extend for 60 months.
With the nine months term deposit, your money is being held for that amount of time without you having any access to it. With penalty payments applied for taking your money out before the terms have matured, you are given an even higher incentive to save. Interest on these types of accounts is generally calculated every day, with the earnings added to your balance when the nine month terms deposit matures.
How do I compare term deposits that mature in nine months?
Term deposits are designed to give you control with plenty of options. Once you have decided that the nine months option will fulfill your savings needs you should then compare its features between various Australian financial institutions.
- A competitive interest rate. Interest rates will vary from bank to bank but should all be competitive for the savings market. Compare the rates being offered in order to ensure that you are maximising your earned interest potential.
- A low, minimum balance requirement. Some banks will allow for a term deposit to be opened with as little as $1,000 while with others you are going to need as much as $5,000. Consider what you can afford to not have access to while comparing this feature amongst financial institutions.
- No or little fees. Like with other savings products, there are typically no account maintenance fees deducted with a terms savings for nine months. You should look deeper into the penalty fees to see how much you stand to lose if you do need to make an early withdrawal.
- Account type. Term deposits for nine months can be opened traditionally in a bank, or be an online only account where you make your deposit using a linked transaction account.
If you know that you can live without access to your savings for longer than nine months you may want to consider a longer term deposit. In some cases the difference in interest rate can make a substantial difference in your savings. Plus, with a nine month term deposit the interest is paid to you at maturity. By adding just three more months you can find a one year term deposit that pays the earned interest into the account monthly. This allows for you to amplify your savings by earning interest on the interest you have already earned.Back to top
Are there any pros and cons I should consider?
Consider the pros and cons of opening a term deposit for nine months:
- Competitive interest rates. Nine month term deposits typically apply a competitive interest rate to your account balance.
- Fees. There are no maintenance or establishment fees with term deposits.
- Extra incentive. For some, having their savings in an account where the funds cannot be touched without penalty is the incentive they need to develop good saving habits.
- Accessing your money. In the event of an emergency where you needed to use your savings immediately, you might have to wait up to a month before the bank can return your deposit to you.
- Interest earnings. With a nine month term deposit you are only earning interest on your initial deposit, not on any of your earned interest.
What are the risks?
Your deposit of up to $250,000 is backed by the Australian Government guarantee scheme, making a term deposit a low risk investment for building your savings. There are however some things you should avoid in order to maximise your savings and interest earning potential:
- Penalties. If you decide to close your account before the end of the terms, not only will you have to pay an administrative fee, the applied daily interest rate will be changed to reflect the interest paid on a shorter term deposit.
- Account roll over. Unless you inform the bank before the account matures that you intend on withdrawing your savings, they will likely just roll your money into a new term deposit for nine months. Inflation and interest rates play a big role in your return on investment, making it important that you review term deposit options again before just allowing your savings to roll over into a new one.