One of the common questions I receive from those people wanting to invest in cash is “What is the difference between a term deposit and a savings account?”
Term Deposit (Term Investment)
With a term deposit your money is locked away for a set period of time. You choose the timeframe you want to invest for (usually from one month to five years). The rates may be different rates for different time periods and, depending on the term you choose, interest is paid monthly, six monthly or at maturity.
You can open a term deposit with as little as $1,000.
If you access your funds you break the term and you receive a reduced interest rate.
(Bonus Saver) Account
This account is like an everyday savings account but you must make at least one deposit and no withdrawals in a calendar month to receive bonus interest. If you don’t, you don’t earn interest for that month only, giving you a little more flexibility than a term deposit.
You also don’t need as much money to open this account as you do a term deposit – it can be as little as one dollar.
It is a good idea to arrange an automatic payment into the account from your pay or other accounts. Free internet and phone banking allows you to can help you keep track of how your savings are going.
This article is intended to provide general information of an educational nature only. This information has been prepared without taking into account your objectives, financial situation or needs. Therefore, before acting on this information, you should consider its appropriateness having regard to these matters and the product terms and conditions. Terms, conditions, fees, charges and credit criteria apply. Information in this article is current as at the date of publication.