There are a few things to consider when deciding if a term deposit is right for your business.
1. What's a term deposit?
A term deposit is a type of savings account that locks away an amount of money for an agreed length of time, known as the ‘term’. Once money is put into a term deposit account, you can only access the money after the term is up. In return, you’ll get a fixed interest rate, so you know exactly what the return on your money will be.
2. How long is the term?
Term deposits come in all shapes and sizes, with terms ranging from a few months to several years. With a Business Investment Account1 you can choose from 8 days to 5 years, depending on what works best for your business.
3. Will you need to access your money?
Most term deposits require notice and charge a fee for accessing your money before the agreed end of the term.
Others are more flexible, like the Flexi Business Investment Account,2 which allows you to access up to 20% of your savings without interest adjustment or administration fees. If you require more flexibility and access to funds sooner, a flexible term deposit or a notice deposit3 might be worth considering.
4. How much can you deposit?
Typically, term deposits require a minimum investment of $5,000. You’re unable to add more money to the initial amount until the end of the term.
If you’ve got less than $5,000, or would like to regularly top-up your savings, you could consider a savings account or notice deposit to earn interest on your extra cash.
5. What are the term deposit interest rates & when is it paid?
You’ll find interest rates and payment schedules online. View the Business Investment Account interest rates.4
Interest is often paid annually for long-term deposits and at the end of maturity for short-to-medium term deposits.
6. What happens when your term deposit matures?
Your bank will usually contact you to explain your options when your term deposit is maturing.
If you do nothing, your term deposit may be closed, placed in the holding facility of your account, or be automatically reinvested for the same term at the interest rate available on the maturity date.
7. What are the benefits of a business term deposit?
- Low risk savings account
- No monthly account fees
- Simple and quick to set-up
- Competitive fixed interest rates
- Knowing rate of return you’ll receive for the agreed term
- A range of flexible terms and interest options to suit your needs
- The interest rate is fixed which means market rates may go up while your money is locked away
- Term deposits up to $250,000 per account holder per institution are guaranteed by the Federal Government
8. What do I need to apply for a business term deposit?
- Personal details, such as address, name of the account and phone numbers
- Details on how many people will be the owner of the term deposit account
- Your transaction account details (to fund the term deposit), tax file number and identification, such as your driver licence
- An Australian Business Number (ABN)
Information required may vary so check with the providers' websites
9. What if I need access to my money before the maturity date?
If you require access to funds before your term deposit maturity, you usually have to provide 31 days’ notice and prepayment costs may apply.
10. Can I top-up my funds while their locked away?
More money can’t be added to the initial amount until the term ends.
