How to manage your term deposit

Term deposits are a popular way to grow your savings with minimal risk. They offer a fixed interest rate over a set period, giving you certainty about your returns. 

But what happens when your term deposit reaches maturity? Knowing your options can help you make the most of your money. 

When a term deposit matures, it means the agreed investment period has ended. At this point, you’ll be notified by your bank or financial institution and given several choices: withdraw your funds, reinvest them, or transfer them elsewhere. 

If you don’t act, your deposit may automatically roll over into a new term – possibly at a different interest rate or under new conditions. 

Your options at maturity: 

• Rollover into a new term. You can reinvest your funds into another term deposit. This is a good time to negotiate a competitive rate or adjust the amount you invest. Be aware that the new rate may differ from your previous one. 
• Partial withdrawal and reinvestment. You might choose to withdraw some of your savings – perhaps just the interest you’ve earned – and reinvest the rest. This allows you to access cash while keeping your investment working. 
• Switch it up. Before committing to another term, shop around. Other banks – or even your own bank (with a little encouragement from you) – may offer better rates or more flexible terms. 
• Withdraw and invest elsewhere. If your financial goals have changed, you may prefer to use the funds for living expenses, home renovations, travel, or to invest in shares or other assets.

Before making a decision, ask yourself: 

• Have I reached my savings goal? 
• Do I need access to these funds in the near future? 
• Am I getting the best deal available? 

Also, remember that interest earned on term deposits is taxable and must be reported to the Australian Tax Office. 

Be cautious of offers that promise unusually high returns or claim to be “like a term deposit”. Always verify that your investment is with an authorised deposit-taking institution and qualifies for the Australian Government’s deposit guarantee. 

Managing your term deposit wisely ensures your savings continue to work for you. Whether you reinvest or redirect your funds, make sure your choice aligns with your financial goals.