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Some things to know about bank term deposits
1. Qualified depositors (like pensioners, low-income earners and others availing of welfare funds, and students) in Australia can now avail of Basic Banking services which have lower transaction fees.
2. Take a look at the interest rate cycle. This historical data is especially important to long-term depositors, who would want to avoid signing up for a term deposit when the interest rates are lower.
3. Make a savings plan. Seek financial advice that fits your situation. At the same time, you should set aside as much money as you think you'll need for regular expenses and possible emergencies outside of your fixed term deposit account.
4. To make the most of your bank deposits, you may want to consider consolidating them into one account. You'll be able to qualify for higher interest-earning deposit levels. You might get bonuses on your account when you consolidate your savings with one bank.
5.You may also want to look at getting an alternative to term deposits, like cash management accounts or trusts (CMA, CMT). These accounts allow you to make withdrawals while still earning you good interest rates.
6. Learn how interest rates on your deposit is calculated and paid. The more often the interest is compounded and added to your account, the you'll earn. For example, given a fixed deposit of $5,000 for twelve months, interest rates calculated daily and paid monthly will earn more than if calculated every three months and credited once a year.
7. Take a look at other areas of your financial health. For example, if you're paying back a loan which has an annual interest rate of 16%, or even 11%, it wouldn't make sense for you to keep your money in a lower-compounding savings account with only 7% annual interest. With this kind of situation, it would be better to open your bank term deposit at a later time, and pay off your debt first.
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