Are term deposits safe?

How safe are term deposits?

Term deposits are a safe, low-risk financial product. Unlike most investments, you can't lose money. And unlike a savings account, your rate won't go down if rates change while your term deposit is still active.

With a term deposit, you lock up the money with your bank at a fixed rate, for a fixed period. At the end of the term deposit your investment matures and you receive the original deposit plus the interest you've earned.

Your return is fixed and guaranteed, unlike with an investment property or investing in the stock market. This means you'll know exactly how much interest you'll earn at the end.

Finder survey: Why do Australians get a term deposit?

Most Australians who open a term deposit do so to earn a guaranteed return.

Term deposits and the Financial Claims Scheme (FCS)

The only way you could theoretically lose money with a term deposit is if the bank collapsed, which is very unlikely. However even if this were to happen, bank accounts, savings accounts and term deposits are protected by the Australian government's Financial Claims Scheme.

Under the FCS, any money you deposit with an Australian bank is protected, up to a total value of $250,000 per person, per bank.

Organisations protected under the FCS must be authorised deposit-taking institutions (ADIs). Any Australian bank, including building societies and credit unions, will almost certainly be an ADI, but you can check via APRA's ADI register.

Our expert says: Things to know about the Financial Claims Scheme

"Under the Financial Claims Scheme, your deposit up to the value of $250,000 is guaranteed by the government. This is per person, per bank - not per account. So if you have multiple deposit accounts with the same bank, you'll only be covered for the first $250,000 combined.

If you've got a large amount of money to deposit, you could consider splitting it up over more than one bank. That way, you'll be covered for the first $250,000 in each different bank."

Alison Banney

Editorial Manager, Money

Are there any term deposit risks?

Term deposits are basically risk-free, in terms of losing money. However, there are some downsides of term deposits.

You can't access your money once it's locked away

Unlike a savings account, with a term deposit you put the money away and forget about it.

But what if you signed up for a 12-month term deposit and then, 6 months in, you suddenly need the cash for an unexpected expense?

Each bank will have its own penalties in place for an early term deposit withdrawal, which could include:

• An early withdrawal fee
• You could lose any interest you might have earned already
• Some banks require a notice period of up to 31 days

In an emergency you can access money in a savings account much faster than in a term deposit.

Term deposits offer a modest return

You could get a higher return by investing the money in the sharemarket. But, you will of course have to take on more risk in exchange for the potential of a higher return.

Sometimes even high interest savings accounts have slightly higher rates than term deposits, although you'll need to meet a few monthly conditions.

Your rate is fixed

Your term deposit rate won't change. This means it won't go down. But in a period of rising rates, it also won't go up.

Let's say you locked in a 3% term deposit for 24 months and then rates started rising. Now your bank is advertising a term deposit rate of 4%. You would be locked into the lower rate until your term deposit ends.

Watch out for automatic rollover

Unless you specify otherwise, many banks automatically roll over a matured term deposit into a new term deposit.

Your bank should notify you close to the term deposit's maturity date. If you don't want the account to roll over, make sure you tell your bank beforehand.

Term deposit comparison

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Finder Score	3 Mths p.a.	6 Mths p.a.	10 Mths p.a.	12 Mths p.a.	24 Mths p.a.
Promoted Finder Score 9.1 Excellent BCU Bank Term Deposit $1,000 min. deposit $999,999 max. deposit	Finder Score 9.1 Excellent	3 Mths p.a. 4.15%	6 Mths p.a. 4.35%	10 Mths p.a. 3.55%	12 Mths p.a. 3.90%	24 Mths p.a. 3.45%	Go to siteMore info Compare product selection Compare	loading
Promoted Finder Score 8.4 Great P&N Bank Term Deposit $5,000 min. deposit $1,000,000 max. deposit	Finder Score 8.4 Great	3 Mths p.a. 4.00%	6 Mths p.a. 3.90%	10 Mths p.a. 3.45%	12 Mths p.a. 3.70%	24 Mths p.a. 3.40%	Go to siteMore info Compare product selection Compare	loading
Promoted Finder Score 9.6 Excellent Judo Bank Term Deposit Finder Award $1,000 min. deposit	Finder Score 9.6 Excellent	3 Mths p.a. 3.90%	6 Mths p.a. 4.10%	10 Mths p.a. 4.05%	12 Mths p.a. 4.45%	24 Mths p.a. 4.00%	You can get competitive interest rates on all term lengths. This term deposit has a low minimum deposit amount and is a 2025 Finder Award winner.	Go to siteMore info Compare product selection Compare	loading
Finder Score 8.9 Great Newcastle Permanent Term Deposit $1,000 min. deposit	Finder Score 8.9 Great	3 Mths p.a. 3.75%	6 Mths p.a. 4.15%	10 Mths p.a. 3.60%	12 Mths p.a. 4.00%	24 Mths p.a. 3.30%	Lock in a rate as high as 4.15% for 6 months with a minimum $1,000 deposit.	Go to siteMore info Compare product selection Compare	loading
Finder Score 7.3 Great Community First Bank Term Deposit Special Offer $10,000 min. deposit $1,000,000 max. deposit	Finder Score 7.3 Great	3 Mths p.a. -	6 Mths p.a. -	10 Mths p.a. -	12 Mths p.a. 4.20%	24 Mths p.a. -	Limited Time: 4.4% p.a. for 8-month term. Available on new funds only. T&Cs apply.	Go to siteMore info Compare product selection Compare	loading

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Finder Score for term deposits

Finder Score assigns Term Deposit products a score out of 10, comparing interest rates and features, to make comparison easier. We assess over 150 products from more than 90 providers, assessing products across different terms to determine an average score per product.

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Frequently Asked Questions

• What are the advantages of a term deposit?

  Term deposits offer a fixed rate and a guaranteed return, making it very low-risk and helpful to plan around. There are no ongoing conditions to meet, so it's a good set-and-forget option for your cash.

• Is it better to put money into super or term deposit in Australia?

  This is a personal decision that depends on your age, retirement goals, investment strategy, income and more. In a general sense, superannuation often offers better long-term growth due to tax benefits, whereas with term deposits your money is more liquid/accessible.

• Are term deposits high risk?

  No, term deposits are very low risk investment options. You can not lose money, and the interest rate is fixed and guaranteed.

• Can term deposit terms be broken?

  Yes, term deposits can be broken, but this usually incurs a penalty, such as reduced interest or not interest, or an early withdrawal fee. It's important to consider this before committing to a term deposit, as a high interest savings account may be more suitable.

• Are term deposits protected?

  In Australia, term deposits up to $250,000 are protected by the government's Financial Claims Scheme, ensuring your funds are safe even if the bank fails.

To make sure you get accurate and helpful information, this guide has been edited by Jason Loewenthal as part of our fact-checking process.

Written by

Alison Banney

Editorial Manager, Money

Alison is an editor at Finder and a personal finance journalist with over 10 years of experience, having contributed to major financial institutions and publications such as Westpac, Money Magazine, and Yahoo Finance. She is frequently quoted in media outlets like SmartCompany and SBS, offering expert insights on superannuation and money management. Alison holds a Bachelor of Communications in Public Relations and Journalism from the University of Newcastle, and has earned three ASIC RG146 certifications in superannuation, securities and managed investments and general financial advice, ensuring her expertise is fully aligned with ASIC standards. See full bio

Alison's expertise

Alison has written 660 Finder guides across topics including:

• Superannuation
• Savings accounts, bank accounts and term deposits
• Budgeting and money-saving hacks
• Managing the cost of living

Co-written by

Richard Whitten

Senior Money Editor

Richard Whitten is Finder’s Senior Money Editor, with over eight years of experience in home loans, property, credit cards and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard started his career in education and textbook publishing in South Korea. He holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Bachelor of Education from the University of Sydney and a Graduate Certificate in Communications from Deakin University. See full bio

Richard's expertise

Richard has written 688 Finder guides across topics including:

• Home loans
• Credit cards
• Personal finance
• Money-saving tips