What happens when you open a term deposit?

Tips

Higher return with certainty


Opening a term deposit is one way of earning interest on your savings.

This can benefit investors seeking a higher return without the investment uncertainty of higher risk assets, such as shares and managed funds.

Even if the Reserve Bank of Australia raises or lowers its official interest rate, the interest you receive on your savings in your term deposit will stay the same.

Term deposits typically offer maturities ranging from one month to five years, and you can choose the frequency of payment for interest earned. There can also be a minimum opening balance to set up an account.

Importantly, the interest rate won't change for the duration of the deposit.

Even if the Reserve Bank of Australia raises or lowers its official interest rate, the interest you receive on your savings in your term deposit will stay the same.

A question often asked about term deposits is, "Can I access my money before the term ends?"

The general principle of a term deposit is that you are locking in a set interest rate for a period of time and your money can't be accessed during that term. Different financial institutions have different policies for withdrawing funds from a term deposit account early, so it's best to review the terms and conditions of any account before you make a decision.

Generally, you can only access your funds in exceptional circumstances – and fees are likely to be incurred

Before deciding how long you want to fix the term, you should consider when you will need access to your money and what interest rate you want to earn.

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Macquarie Bank Limited ABN 46 008 583 542 AFSL & Australian Credit Licence 237502 (MBL). This information does not take into account your objectives, financial situation or needs. Before making any financial investment decision or a decision about whether to acquire any product mentioned on this page, a person should obtain and review the terms and conditions relating to that product and also seek independent financial, legal and taxation advice.