Compare three-month term deposit rates

Some term deposits run for three months or less, while others have investment terms that can last for years. 

A three-month term deposit is a short-term investment product offered by banks and financial institutions. When you invest in a three-month term deposit, you deposit a specific amount of money for a fixed period of three months. During this time, your money earns interest at a predetermined rate, which is agreed upon at the start of the term. 

If you can find a competitive interest rate, locking up your money for a shorter term like 90 days could let you get a decent return on your investment, while still enjoying some flexibility. For example, if you were to receive a tax refund or an inheritance, you could choose to put this money in a three-month term deposit to earn interest while you work out your long-term personal objectives or savings goals. 

Longer term deposits often have higher interest rates than shorter term deposits. You may also find that the more money you have to deposit, the higher the term deposit rates you may be offered. Some term deposit products may also require a minimum deposit size to be eligible for high interest rates. 

When you’re comparing the interest rates of Australian term deposits, remember that term deposit interest rates are usually listed at the ‘per annum’ or annual rate. This means if you choose a three-month term deposit, you should earn a quarter of the interest on your deposit that you could earn over a year. 

You may also find that your 90-day term deposit offers a ‘rollover’ feature. This means that when the term ends, you can immediately have the deposit (plus the interest you’ve already earned) rolled straight into another fixed term. If the rollover is automatic, and you forget the end date of your three month term deposit, your money might be reinvested into a new term deposit even if you don’t want it to be. The rollover interest rate could be different to your original interest rate, especially if you had a 90-day term deposit with a higher introductory rate, or one that offered bonus interest. 

It’s worth comparing three-month term deposits to make sure you’re not only getting the best interest rate for your financial situation, but the right term deposit features and benefits as well. When your term deposit matures, you can also compare other options to work out if you want to roll your deposit over or switch. 

Just like longer term deposits, and money deposited in bank accounts, 90-day term deposits are guaranteed by the Australian government as part of the Financial Claims Scheme (FCS), up to $250,000 per account holder per bank. 

When it comes to investing your money in a term deposit, you have a variety of options ranging from short-term to long-term deposits. Short-term deposits, like a three-month term deposit, offer a brief commitment period. They could be suitable for somebody looking to earn some interest without locking away their funds for an extended period. 

Long-term deposits, on the other hand, might offer higher interest rates compared to some short-term deposits but you’ll need to commit your funds for a longer duration to earn that higher rate. Deciding between a short-term and long-term deposit will largely depend on your financial goals and liquidity needs. 

If you’re considering a short-term deposit, here are some pros and cons to help you make an informed decision. 

Pros of a three-month term deposit: 

• Greater flexibility than long term deposits: Choosing a shorter term deposit can mean accessing your money again sooner, and choosing whether to roll your deposit over or switch to a new term deposit deal. 
• Lower risk: You can know exactly how long your money will be tied up and what your rate of return should be. 
• Helps manage your spending: Once locked in, you can’t easily access your deposit until the end of the term. This means it can’t be easily spent on everyday items. 
• Helps with saving: By depositing your wealth to earn interest, you can save money to spend on big-ticket items. 
• Set and forget: Once your term deposit is locked in, you don’t have to do anything else until the term ends. 

Cons of a three-month term deposit: 

• Relatively lower interest rates: Term deposits for shorter durations, like three months, often have lower interest rates than longer term deposits, so you may earn less interest on your savings. 
• Less access than a savings account: Your money cannot generally be withdrawn during the term without being charged a penalty fee. 
• Fixed interest rate: If interest rates rise during your term, you won't benefit from the higher rates until your deposit matures and you reinvest. 

A three-month term deposit might be an option for someone seeking a secure, short-term investment. It offers the advantage of a fixed interest rate, so you know exactly how much interest you will earn by the end of the term. 

However, it's important to be aware that you likely won’t have access to your funds during this period. Many banks in Australia require you to keep your money in the term deposit until it matures. While some might allow early withdrawals, this usually involves paying a penalty fee and providing sufficient advance notice. Be sure to check your bank's specific terms and conditions regarding early withdrawal policies to ensure you’re comfortable locking away your money for a few months. 

Compared to longer-term deposits, a three-month deposit may offer a lower interest rate. However, some banks provide special offers, making it worthwhile to compare providers to find the best deal for you. At the end of the term, you may decide to roll over the money into a similar or longer-term deposit or invest it elsewhere. 

Ultimately, a three-month term deposit might be an option worth exploring if you’re looking for a short-term, low-risk investment. Assessing your financial situation and goals can help you determine if it is the right choice for you.