“Do not put all of your eggs in one basket.” It’s an old saying that holds true for savings. If you’re serious about growing your money, it is not enough to keep it in a typical savings account. Let your money work for you by putting some of it in other products that can offer better returns. One of these is term deposit. It is a cash deposit at a bank, building society or credit union with interest in a certain period of time, referred to as term.
Opening a term deposit is a good idea, especially if you are saving for a major event or milestone such as a wedding.
Opening a term deposit is a good idea, especially if you are saving for a major event or milestone such as a wedding. Time is your asset when it comes to term deposits so start saving early so you can grow your money. Before you know it, you’ll have money to pay for wedding costs. Here are some things to consider when it comes to term deposits:
Know the term deposit rates in Australia
The best rates are usually for longer-term deposits. Banks and other financial institutions offer different rates, so make sure to compare their offerings to get the best option. You can use fixed term deposit comparison websites to make the selection process easier.
Think about tenure
The longer you keep your term deposit, the higher the return is. The length of your investment can range from one month to five years. Assess your financial situation so you can decide which tenure suits you.
If possible, open more than one term deposit
Interest rates for term deposits change, so many investors usually divide their cash to invest in deposits at different terms. In this way, they can get the most out of the best fixed interest rates available. They also get higher returns for longer-term deposits while having access to cash on shorter-term deposits.
Prepayment penalties apply
Term deposits are ideal for money that you don’t need right now. That is why if you’re setting money aside for your wedding in the future, opening a term deposit is a good idea. However, in case you need to get your money before the maturity date, you will pay early withdrawal or prepayment penalties.
Look at the credit standing
While Australia has a Financial Claims Scheme wherein bank deposits of up to $250,000 per customer and institution are guaranteed, it is still important to check the credit rating of the institution where you want to open a term deposit.
Got other tips on interest rates for term deposits in Australia? You can share your ideas in the comments section below.