Can you end a term deposit early? What you need to know

Even with a solid savings plan, life can throw unexpected expenses your way. If your money is tied up in a term deposit, you might be wondering whether you can access it before it matures.

The short answer is yes – but there are some important conditions to keep in mind...

If you intend to withdraw all or part of your funds early, you’ll generally need to provide at least 31 days’ notice to your bank. Some institutions won’t allow you to do this online. In these cases you can discuss your options with a representative over the phone or visit a branch.

If you only withdraw a portion of your funds before the maturity date, make sure that the balance doesn't drop below the minimum deposit amount. When this happens, the bank has several options, including closing your account or transitioning your remaining funds to a standard rate savings account.

However, most banks stipulate that if you have less than 31 days remaining on your term (the typical closure notice period), the earliest you can access your money is at maturity.

By fixing your cash for an agreed-upon period, the bank can use these funds to finance other products like home loans, credit cards and personal loans. To dissuade depositors from making early withdrawals, term deposits will often come with penalties such as an: 

• early withdrawal or administration fee.
• interest rate adjustment.

The administration fee for breaking a term deposit early is typically a flat fee – around $30.

Often, banks will also adjust the amount of interest you can expect to receive. For example, a reduction structure might look something like this: 

Let’s say you commit $100,000 in a 12 month term deposit at an interest rate of 3.71% p.a. (average for this duration on Mozo’s database at 25 September 2025) which will be paid out at maturity.

Here’s the figures using Mozo’s term deposit calculator:

Five months into the term, you decide you need that money back in your hands.

First, you’ll need to provide 31 days’ notice, so any interest rate adjustment will take into account the extra month that will have elapsed by the time you receive your money. Therefore, the earliest you can withdraw your funds is at six months elapsed.

After six months, you would have accrued $1,855 in interest.

Now, let’s look at the calculation that needs to be made if an early withdrawal occurs.

In most circumstances, an interest rate adjustment is applied on a similar sliding scale to the one above and each provider will be different. For our purposes here, let’s assume that if only 50% of the term remains, a 60% deduction will apply. 

This means you’ll lose $1,113 in earned interest, leaving you with just $742.

In addition you may need to pay an early withdrawal administration fee of around $30.

Therefore you’ll receive a principal and interest total of $100,712. In this case, you’ll be missing out on nearly $3,000 extra profit for ending the term deposit before maturity.

Things get a bit more complicated if interest has been paid out in the interim (many term deposits of one year or more pay out interest monthly). The bank might need to recover some of these funds in order to account for the interest rate adjustment.

It’s important to remember that not every bank and institution apply the same rules and fees. Before opening an account, check the terms and conditions for early withdrawals.

Keep in mind that some banks may be lenient in certain circumstances, including if you’re experiencing extreme hardship. If that’s the case, you could receive all the interest that’s been accrued. The same goes if the account holder of the term deposit passes away.

You should try to keep your term deposit for the full duration of the term if possible. Having to close it early means you’ll only reap a portion of the benefits. 

Thankfully, there are some preparatory steps you can take to avoid this scenario.

Keep a separate emergency fund

Regardless of your current financial circumstances, it’s always a sensible idea to have an emergency savings fund in case life takes an unexpected turn. Medical emergencies, redundancy, and evictions can hit at any time – so it’s generally advised to have at least three months’ worth of expenses set aside to help cushion the blow. 

Opt for shorter terms

Long term deposits (terms of one year or more) are a pretty big commitment, so if you’re someone who tends to move money around frequently it might be best to avoid them. 

The key is to find a middle ground in which you’re getting an attractive rate from your term deposit, while not committing to an excessive duration. Some of the best term deposit interest rates on Mozo’s database now are for durations between three and eight months.

If you’d like to compare term deposits, you can browse our term deposits comparison page for a comprehensive assessment. If you’re interested in a more flexible arrangement, there are plenty of savings accounts offering high interest but these may impose strict conditions.