Compare six-month term deposit rates

Looking for a short-term investment option? If you’re confident you can afford to lock away your savings for six months or more, you could start by looking for a competitive interest rate on a six-month term deposit. 

A short-term deposit could help you work out how your lifestyle may be affected by living without direct access to your savings. By the end of the six months, you’ll know if you’re ready to invest your money for a longer period of time. 

As the name implies, a six-month term deposit allows you to invest your money for six months. The money you invest is your deposit, and the length of time you keep it invested with a bank, credit union or building society is the term. 

During this investment period, you will not have easy access to this money, unless you’re willing to pay a penalty fee for early access. However, you will earn interest on your deposit at a fixed interest rate, growing your wealth over time. 

Because you’ll know your term length and fixed interest rate, it’s possible to calculate how much interest you can earn on a term deposit ahead of time. This can be helpful when it comes to organising your budget. 

When it comes to term deposits, the timing of interest payments can vary based on the provider and the specific terms of the deposit. Typically, interest can be paid monthly, quarterly, semi-annually, annually, or at maturity. However, for shorter-term deposits, some providers may only offer to pay interest at the end of the term. 

Choosing more frequent interest payments could also lead to lower interest rates compared to receiving the interest at maturity, as providers may adjust the rates to account for the more frequent payouts. 

At the end of a six-month term deposit, when your deposit “reaches maturity”, you have several options for your money. If no action is taken, many banks will automatically roll over your deposit into a new term, potentially at a different interest rate. However, you can also choose to move your funds to another bank, reinvest in a different term deposit with the same bank, or withdraw your money. 

It’s easy to leave your money where it is, especially if the end of your term deposit catches you by surprise. While banks typically notify you that you’re approaching the end of your term deposit, it’s wise to make a personal note of the date. This allows you to review your options and make informed decisions about reinvesting or withdrawing your funds, ensuring your financial strategy remains aligned with your goals. 

If you want to withdraw money from your term deposit before the end of your term, you’ll likely need to pay a fee. Consider checking the details of any penalty or breakage fees before you sign up for a six-month term deposit, as this amount may vary depending on the size of your investment. You may also receive less interest if you withdraw money early from a term deposit. 

Many banks also require advance notice (e.g. 31 days) if you want to withdraw funds from a term deposit before maturity. So make sure to compare different term deposits and read the product disclosure statements carefully. 

A six-month term deposit may be a secure place to park your money in the short term, offering the benefit of fixed interest rates. 

While a term deposit ensures you know exactly how much interest you’ll earn, it also means your money will be locked away for the duration of the term. This means you won’t be able to access your money for six months and may need to pay a penalty for early withdrawal. 

While this could be a drawback in an emergency situation, it can be helpful for someone who wants to save for a goal, especially if they have difficulty controlling impulse spending. 

In comparison, savings accounts typically offer high liquidity and flexibility. You can generally deposit and withdraw funds anytime without paying penalties, making this money available for managing day-to-day expenses and emergencies. 

It’s worth remembering that the interest rate on a savings account is variable, leading to unpredictable earnings. Additionally, the interest rate may be lower compared to a term deposit. Among different savings accounts, some may offer higher rates, but these could be conditional on maintaining a minimum monthly balance or limiting the number of withdrawals. 

A six-month term deposit can strike a good balance between earning interest and maintaining some flexibility. If you find a term deposit with a competitive interest rate, you can invest your savings and potentially reinvest the interest every six months to continue growing your wealth. And if you compare term deposits and find that there are better options for you out there, you won’t have to wait as long for your current term to end before switching. 

Generally, the longer the term deposit, the higher the interest rate you may be offered. While you can likely still find good interest rates for six-month term deposits, some of the highest term deposit interest rates may only be available for term deposits of 12 months or longer. To maximise your earnings, compare the interest rates and term length of various deposits and calculate the potential interest in advance. 

Some six-month special term deposits have introductory offers for new customers, such as higher interest rates. However, these special bonuses are often only available for a limited time. For example, when your six-month special term deposit reaches maturity, if you choose to roll it over for another term, you may be switched onto a lower rate. Compare different term deposits to work out which offers may best suit your situation.