Types of term deposits

Term deposits lock your money away for a set period, at a set interest rate. Usually, the longer the period, the better the savings interest - and the fatter your pile grows.

Pros:

• Fixed term deposits give you guaranteed interest
• No risk of lower interest if Reserve Bank rates fall
• Plan for the future with predetermined savings. Decide on a savings goal, and put your money away to achieve it
• You can't access your savings when a particularly tempting sale comes along

Cons:

• You can't access your savings when a particularly tempting sale comes along
• If interest rates rise, you might find that bountiful term deposit rate doesn't look as generous two years down the track

Account Types

As it turns out, term deposits are relatively limited by way of variety and plumage. Here are your term deposit account types:

• Short term deposits. Stash your cash for as little as three or six months, with a guaranteed rate and no sneaky access to your savings should you get the urge to splurge.
  Pros: Can't read the future? Get a great rate for 3 to 6 months until the future comes to you.
  Cons: A lower rate than longer term deposits. Take me to the best short term deposits
• Long term deposits. Get the best savings interest with a longer term deposit - perfect for sensible savers and those planning on an extended stay in a monastery.
  Pros: Typically the biggest and best interest rates going around.
  Cons: Inflexibility; penalties for early withdrawal. Show me the best long term deposits!
• Rollover term deposits. Some accounts give you the option of rolling over your investment for another term.
  Pros: Don't stop the savings music!
  Cons: Always check current savings interest rates before rolling over - the easiest option isn't always the best deal out there. Take me to the best rollover term deposits!
• Savings accounts. Yes, ok - you savvy savers already know that savings accounts are not really a species of term deposit. But do you know which one is for you? Compare savings accounts