Compare term deposits
Before you start your journey to compare term deposits it is important to ensure you remember to look at the finer detail of each offer.
Each term deposit can have slightly different features which can make doing a term deposit comparison challenging.
Below you will find some helpful tips on how to best compare term deposits
Size of bank
There are pro's and con's of going with larger banks over smaller banks for your term deposit. Factors to include consider:
- Larger banks might be more robust but may pay you a lower interest rate
- Smaller and lesser known banks may not be as robust but may offer higher rates to attract your capital
- The Financial Claims Scheme doesn't cover all of the larger banks' deposits, meaning you may not have full deposit protection even if your amount is under $250,000 (download our eBook to find out more)
Term length
You should decide what term you are prepared to lock away your money for and ensure you compare like-for-like terms.
Terms typically range from 1 month up to a 10 year period depending on the bank.
Interest rate
Interest rates are often the biggest focus of consumers when comparing term deposits. A higher interest rate means you are likely to earn a higher income from the term deposit.
Assuming all other factors are equal, the bank that offers you the best interest rate is generally the one that will earn you the most income on your capital.
Penalties
Check to see what happens if you need your money out early. Early withdrawal penalties often apply either in the form of fees or a loss of interest. Check the terms and conditions to ensure you are comfortable with any early exit clauses prior to selecting your term deposit
Interest payment frequency
Many term deposits offer a variety of interest payment options. This includes monthly, quarterly, annually or compounded and paid at maturity or at predefined intervals. This is important if you are wanting to receive a regular income of your capital.
To find out more about how term deposits work in Australia we recommend downloading a copy of our FREE eBook by completing the form below.
