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When should you choose a term deposit?

22 June 2023
• 3 minute read
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When it comes to the best place to squirrel away savings, most people tend to think of high-interest savings accounts. While this is a perfectly valid choice, there are several scenarios in which a term deposit might be a better option.

In this article, we take a look at the advantages and disadvantages of term deposits, who is most likely to benefit from them, and whether one might be the right choice for you.

What are the benefits of a term deposit?

A term deposit is a low-risk form of investment which involves you locking away a sum of money for a set length of time. Because you get a guaranteed rate of interest, you know exactly how much your return will be at the end of the term.

And therein lies the defining benefit of a term deposit – certainty. With that in mind, let’s take a deeper dive into the reasons why it might be the best place to stash your savings.

Low maintenance

While some savings accounts offer interest rates comparable to what you might enjoy with a term deposit, getting the full rate is usually dependent on eligibility criteria being met. This typically involves depositing a certain amount into a linked transaction account and making a minimum number of card purchases every month.

There are no such conditions with a term deposit. You can happily ‘set and forget’, safe in the knowledge that your savings are racking up a consistent level of interest  .

Guaranteed return

Perhaps the most appealing benefit of a term deposit is the guaranteed return. Unlike other forms of investment such as shares and property, term deposits are insulated from market volatility, so you can be secure in the knowledge of how much you stand to gain.

Low risk

Speaking of security, term deposits are backed by a government guarantee up to the value of $250k, so they’re particularly appealing to those who like to play it safe.

Can help keep your savings goals on track

The trouble with saving is that the more you put away, the greater the temptation can be to start spending. Term deposits are structured in such a way that you can’t access your money for the duration of the term.

Well, you might be able to (it’s at the bank’s  discretion) but doing so before the term’s maturity date means an early withdrawal interest adjustment will likely apply.

Obviously this doesn’t guarantee you won’t dip into your savings but it’s certainly a good incentive not to!

Is a term deposit right for you?

Term deposits are a solid investment option for people who are sure they won’t need to access their funds for a while. An example might be customers who have paid off their home loans and are looking to earn the best possible return on higher deposits.

It also comes down to personality. If you’re the sort who likes to minimise risk and uncertainty, then a term deposit can be very appealing regardless of your savings goals.

Great Southern Bank Term Deposits

Great Southern Bank Term Deposits range from one month all the way up to five years, with the interest rate you get depending on the length of the term.

You can see how much interest you could earn  by using our term deposit calculator.

Whichever length term you go for, you get the choice of having interest paid monthly or at maturity, with terms longer than a year being paid annually. It’s worth noting that the interest rate is slightly higher if paid at the end of the term rather than monthly.

And perhaps best of all, we won’t charge you a cent in monthly account-keeping or application fees!

If you have any questions about our term deposits (or anything else), feel free to give us a call on 133 282. Alternatively, you can always pop into your nearest branch for a chat.

Important Information

Great Southern Bank, a business name of Credit Union Australia Ltd ABN 44 087 650 959, AFSL and Australian Credit Licence Number 238317. Conditions, fees and charges apply. This is general information and does not take into account your objectives, financial situation or needs. Consider the appropriateness of the information, including the Terms and Conditions (T&Cs) booklet, before acting on it. The Financial Claims Scheme may apply to this product; refer to the T&Cs for more information.

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