6 ways a term deposit can help you level up your savings in 2024

We take a look at how term deposits can help you save more cash and build wealth.

Saving is about more than having emergency funds available. It's about hitting financial goals and growing your long-term wealth. Today, we take a look at how term deposits can help.

Learn more about term deposits with MyState

1. Guaranteed returns

Term deposits are a type of savings account that has a fixed interest rate over a pre-agreed period – that is, a "term".

The rate of interest will usually vary depending on the length of the term. However, this doesn't always work on a simple sliding scale.

For example, MyState Bank is currently offering a rate of 5.00 %p.a. on 7 month term deposit.

MyState also doesn't charge monthly account fees on term deposits, so you don't need to worry about additional costs chipping away at your savings.

Unlike most savings accounts, you don't top up your term deposit on an ongoing basis. Instead, your returns are guaranteed for a certain amount – so you essentially store your funds for a period of time and collect a predetermined amount of interest on it once that time ends.

Knowing how much you'll collect at the end of the term can help with specific savings goals, budgeting and future planning.

Find out more about guaranteed returns with MyState

2. Keeps funds out of sight and out of mind

Regular savings accounts allow you to redraw money. Sometimes there are restrictions or a penalty attached, but you're generally able to access your money should the occasion arise.

This can be quite handy if there's an emergency and you need cash. Conversely, it can also mean that you've got relatively easy access to a significant amount of money.

If you choose to withdraw your funds from a term deposit early, it may involve some paperwork and penalties.

A term deposit from a bank like MyState can potentially help remove some of that temptation and keep you on target for your savings goals.

3. Additional security in comparison to other investments

Investing can be a great way to build wealth. But it's also got inherent risks. Some are riskier than others but even a fairly low-stakes investment still has the potential for you to lose your money.

By contrast, term deposits are considered a very low-risk investment. For example, MyState term deposits of up to $250,000 are covered by the Australian Government Financial Claims Scheme.

For more risk-averse investors, term deposits can be an effective way to reduce stress and exposure, while still growing wealth.

4. Hit short and mid-term savings goals

Although some people are able to save money easily, for many of us it helps to have a specific goal in mind.

This is one area where term deposits can be helpful.

If you need to hit a financial target by a specific date (for example, a holiday or a home renovation), term deposits can be a great way to grow your funds and know that you'll have guaranteed savings at the other end.

5. Opt for a 7 month term now to save for Christmas

Term deposits can be a great way to set aside funds for a future event or purchase. Christmas might seem a while away right now – but this means it's also a great time to take advantage of term deposit offers and get your funds in order for when the holiday season hits.

Let's look at MyState's 7 month term deposit as an example. Currently, it's offering a rate of 5.00 % p.a.

So if you put in $50,000 today (April 22, 2024), when November 22 arrives you'll have $51,458.33 ready for the holiday period.

You can see a more detailed breakdown using MyState's term deposit calculator.

Setting aside money like this can allow your funds to grow over time, without needing to worry about specific clauses in accounts or potentially losing it all in riskier investments.

Start saving for Christmas today with MyState

6. Use it in conjunction with a high-interest account

People who have long-term success at growing wealth typically do so using more than one method. They might put some money into investments, top up their super and create an emergency fund so that they've got a balanced approach in place.

Term deposits can be a useful investment method, and another is high interest accounts.

Though each high interest account is different, they usually share some common features and have similar interest rates.

For example, the MyState Bonus Saver account allows you to earn up to 5.00 %p.a. interest, when you deposit a minimum of $20 and make 5 eligible transactions using a linked transaction account each month. One of the features of this account is that funds can be withdrawn at any time without penalty.

It's always worth speaking with a professional before making large-scale financial decisions – but with these examples, you can start to see how people can use a multi-pronged approach to build wealth over a longer period.

Learn more about hitting your saving goals with MyState term deposits

Compare a range of term deposits right here on Finder