What you need to know about 1 month term deposits
If you’ve been a savvy saver and have a decent lump sum of money ready to go toward a home loan deposit or buying a shiny new car, a 1 month term deposit could be just the thing you’re looking for to give your savings a push across the finish line.
If you don’t want your money to waste away in an account where you’re earning peanuts for interest, a short term deposit can help you achieve your savings goals. Here are the how’s and why’s of 1 month term deposits.
What are the benefits of a 1 month term deposit?1 month term deposits offer some perks you might not get with a longer term. Here are some good reasons to consider locking away your savings for a short period of time:
- Boost short term savings. Whether you’re saving for a deposit on a home or are looking for somewhere to stash your cash between investments, a 1 month term deposit can help you achieve your savings goals.
- Only a short term commitment. 1 month term deposits offer you a higher rate than a savings account without the commitment to the long haul, making it less likely you’ll have an emergency that sees you withdrawing your funds early and incurring break fees.
However, generally speaking, you’ll get a better interest rate the longer you lock your money away for, so this might not be the best rate around. Also, compared to a savings account, a term deposit is way less flexible.
What is the minimum amount I can put in a 1 month term deposit?
The minimum amount you can stow away in a term deposit can range from $1,000 to $25,000 and over. The more you deposit, the more you’ll earn in interest, and since you’ll only be earning interest for the month, it’s a good idea to put in a large deposit if you can, to see real returns. For instance, if you stash away $100,000 in a term deposit offering an interest rate of 2%, you’ll earn around $166 that month with no effort at all.
Can I top up my 1 month term deposit?
Once your term deposit is locked away, you can’t touch it to take money out or put more money in without paying extra fees. The good thing is, once the month is over, you have the option of putting your original amount plus some into a new term deposit.
However, if you want access to your money again at the end of the term instead, remember that it’s important to keep an eye on your term deposit as some banks will automatically ‘roll over’ your funds into another term, sometimes even at a lower interest rate.
What happens at the end of my 1 month term deposit?
When your 1 month term deposit matures, you have two options:
- Have your term deposit paid into your account. If you need access to your money at the end of the term, let the bank know that you’d like it paid out.
- Roll over into another term. You can choose to reinvest your term deposit for another term, to grow your savings further. Make sure you check the interest rate on offer and compare other offers, in case there’s a better deal out there. Some banks will automatically roll over your funds into a new term unless you let them know you don’t want that, so make sure you let the bank know what you want to do.
Whatever route you go down, the main takeaway is that you should let your bank know what you want to do, so you don't accidently wind up with your savings rolled over into a new term at a low rate.
How do I collect interest on my 1 month term deposit?
Collecting the interest on your 1 month term deposit is simple. When your term deposit matures, as long as you’ve advised the bank that you’d like it paid out, money will automatically be transferred into an account of your choosing. Many term deposits can be paid out into any bank account you like - for others, you’ll need an account with the same bank you have the term deposit with.
Long term deposits usually offer a choice in the frequency of your payments (typically monthly, annually or at maturity), but if you’re only locking in for a month, the short length of your term deposit means you’ll be receiving the interest in a lump sum at maturity.
Where can I find the best rate for a 1 month term deposit?
For those looking to boost their savings in the short period of time, 1 month term deposits could be exactly the right solution. To maximise your earnings, you’ll want to find a great, competitive interest rate, and Mozo’s term deposit hub is just where you’ll find that. Then, put your deposit amount and interest rate into our term deposit calculator to see how much return you’ll get on your savings stash.