Savings aren’t just for a rainy day and putting a system in place doesn’t have to be difficult, either. A term deposit can help take the guesswork out of saving while giving you access to attractive interest rates. You select the term (the amount of time you’d like to save for) and the total amount you want to save. You can’t access your savings during the term, which helps to eliminate temptation. When the term is up, you gain access to your cash and reap the rewards of your dedication.
Here's how you can use a term deposit to set and achieve your goals.
Five ways a term deposit can help with your goals
1. Offers a competitive interest rate
Interest is the money you earn on cash stored in your bank account, typically expressed as an annual percentage. It works the same way as the interest you pay on your credit card or a home loan for the privilege of borrowing money from a lender. When you store money in a bank account, you become the lender, and the bank pays you interest. The higher the interest rate on your account, the better.
Typically, term deposits offer a higher interest rate than savings accounts, and that interest rate is often fixed over the term. That means more cash in your pocket, empowering you to achieve your goals sooner.
2. Eradicates temptation
Saving money isn’t always straightforward and sometimes resisting the temptation to spend money is difficult.
A term deposit could be the perfect solution if you have trouble with self-managed savings. Restricting access to your funds essentially eradicates temptation, so you can be confident in your ability to reach your goals.
3. Establishes a realistic timeline
Life happens. It’s unexpected, surprising, and, at times, challenging. However, a term deposit can provide a sense of certainty, giving you a set-in-stone timeline during which you can work toward your goal. Once the term is up, you’ll have the funds you need to make it happen.
4. Fuss-free setup
Setting up a term deposit is usually as easy as opening a regular bank account. Often you can do it online and customise the interest rate and term to meet your specific needs.
Better yet, term deposits are included in the Financial Claims Scheme. This government-backed program protects you and up to $250,000 of your savings in the unlikely event your bank goes under.
5. Set-and-forget maintenance
With a term deposit, there’s no need to make regular payments or worry about withdrawals. Instead, you set the term, and your money does the work for you, getting you closer and closer to big-ticket items like a house deposit or holiday every single day.
Is a term deposit right for you?
Everyone deserves financial security and wellness, and for some, a term deposit is a fantastic way to turn dreams into realities. If you are interested in opening a term deposit, you might want to speak with a financial adviser first.