Compare and find the highest rate short term deposits

Short term deposits are generally a secure way to grow your savings. If you’re looking to invest and grow your savings for a period of up to 12 months, then a short term deposit may be worth exploring.

A short term deposit is essentially a sum of money you invest for a short period of time at an agreed interest rate. At the end of the short term deposit period, the bank or lender will return the original amount you invested plus any interest you’ve earned on that money. Depending on the account, when the short term deposit finishes, you may have the option of rolling the funds over for another term.

Short term deposits vary in time, from 30 days (one month), 60 days (two months), 90 days (three months), 120 days (four months), 180 days (six months) to 12 months (one year). From time to time, lenders may offer special terms like five-month special term deposits. When comparing short term deposits, you may notice that each term has a different interest rate. The general rule of thumb is that the longer the term, the higher the interest rate.

A short term deposit can be an appealing investment because they’re considered low-risk and provide a stable return. It’s worth noting that most short term deposits charge penalties if you choose to withdraw some or all of funds before the short term deposit matures. To avoid any unnecessary penalties, consider both your short- and long-term needs before you lock away your savings for a fixed period of time.

Short term deposits appeal to some savers for a whole range of reasons, including:

• If you’re unsure whether you’ll need your money at some point in the near future
• You have a short-term savings goal to spend on a holiday or a house deposit
• You’re unsure if interest rates will rise
• You’ve never invested in a term deposit before and want to try it out
• You’ve inherited a large amount of money and want to lock it away until you need it
• You’d like to invest in several short term deposits with many different time terms

Whatever your reasons, find a term that suits your needs and an interest rate that gives you the greatest return. It always pays to do your research, so before you stash away your savings, compare your options.

If you’ve managed to amass some savings and you’re looking for an easy way to get a guaranteed return, short term deposits may be the answer. When comparing short term deposits, you’ll ideally want to find an offer that gives you the biggest bang for your buck and helps you grow your savings by paying the most interest.

Interest rate

The interest rate you earn on your short term deposit is essentially your return on investment. The percentage advertised is the amount of interest you’ll earn over the life of the short term deposit. When comparing short term deposits, look out for the ‘next interest rate’, which is the rate you can earn by depositing your savings for a longer term. If you don’t need access to your funds, investing for a longer period may earn you more interest.

When it comes to comparing interest, it’s not just about the rate. Take notice of whether the interest compounds monthly or at the end of the term. Short term deposits that compound interest monthly will usually earn you more interest over the term of the deposit. Of course, this varies depending on the lender and the amount you invest.

Minimum deposit

Some short term deposits usually have a minimum and maximum deposit amount. In most cases, the minimum deposit is $1,000 and the maximum differs between accounts. The interest rate may differ depending on the amount you invest, so compare your options to ensure you get the best rate of return.

Additional requirements

If you open a short term deposit with another bank, check that you don’t need to open any additional accounts and that you can easily deposit and withdraw funds between banks.

Withdrawing funds

When you invest in short term deposits, you’re agreeing to lock away your savings for a fixed period. If you need to access your funds before the maturity date, you’ll most likely be penalised. While it’s not ideal to prematurely withdraw your funds from short-term deposits, take notice of the charges so you know where you stand.

Rollover terms

Rollover terms are the options available to you at the end of your term, when you’re able to reclaim your deposit and interest earnings. Some providers will require a certain number of days' notice if you're planning on withdrawing your funds and closing your term deposit account.

Some term deposits will allow you to immediately reinvest your savings into a new term deposit and earn even more interest. If you do decide to reinvest right away, it’s important that you reconsider what the current interest rate is as it may have changed since you first opened your account.

You may have the option to have this interest paid into a bank account of your choice, to supplement your household income, or even put towards your home loan or outstanding credit card debt.

Flexibility

Savers looking for a more flexible way to stash away their cash might also want to consider high-interest savings accounts or savings accounts that offer bonus interest.