What do you need for a term deposit?
One of the great things about a term deposit is that it’s not only a low risk way to earn a return on your savings, but also a pretty low maintenance one. That doesn’t mean there aren’t some great tricks to making your term deposit work harder for your money - but it does mean that opening a term deposit is a pretty stress-free process.
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Here are some of the important things you’ll need when opening a term deposit:
Your contact details
You’ll usually have to list both a phone number and email address when you open a term deposit, especially if you’re applying online. It’s important to give accurate details and update them when necessary, because this is how the bank will remind you when your term deposit is about to mature.
Often you’ll need to provide some form of photo I.D, such as a Driver’s licence, Medicare Card, or passport, particularly if you’re new to the bank when you sign up for a term deposit. One of the reasons for this is proof of age, although age limits on term deposits are pretty lenient - some offers are available to savers as young as 12.
If you bank with a mutual or credit union, you’ll need to supply your member number. If you’re not a member already, chances are you’ll have to sign up. Keep in mind, there might be a small membership fee involved.
A savings/bank account
You’ll need an account for the interest from your term deposit to be paid into. This shouldn’t be an issue if you’re opening a term deposit with your current bank, but sometimes, it won’t have a great term deposit offer, and you’ll want to head elsewhere to find a place to stash your cash. Be sure to check if your new provider will pay interest into your old bank or savings account - some won’t and you’ll be required to open a savings or bank account along with your term deposit.
A minimum deposit
Many term deposit offers come with a minimum deposit requirement attached - often around $1,000. You’ll need a lump sum of at least that much before you look at opening a term deposit. Remember, you won’t be able to withdraw from or deposit into your term deposit after the initial deposit, so make sure you think through how much you’re going to lock away before taking the plunge.
A desired term
You can choose to take out a term deposit for a relatively short term, between 1 month and 1 year, or for a longer term - up to 10 years in some cases. The important thing is to consider your budget and future plans before you decide, and make sure it’s a length of time you can stick to. The last thing you want is to be making an early withdrawal from your term deposit.
Because a term deposit is a long term commitment, it’s important to have a budget in place before locking in. The reason is twofold; one, you need to make sure your budget isn’t relying on the funds you’re locking away, and two, you should have enough funds left outside of your term deposit to cover an emergency. That way, you’ll be much less likely to have to make an early withdrawal.
A future savings plan
When your term deposit matures, whether that’s a month from now or ten years, you’ll need to have a plan in place for what you want to do with the funds. It’s important to know whether you want to withdraw the money and start using it again, or re-invest it for another term, because if you forget to make arrangements, your money will often automatically roll over into another term. These rollover terms often have much lower interest rates than your original, and you’ll be locked in for the full term again.
Top term deposit tips
1. Remember to do your research. One of the most important things when setting up a term deposit is to do some research and work out just what you need and what will work best for you. Read up on things like the types of term deposits available, the features of term deposits and lots more in our term deposits guide section.
2. Get some first hand knowledge. Check out our term deposit review section to find out what real Aussies thought about their term deposit, in areas like convenience, price and the provider’s customer service.
3. Crunch the numbers. Once you lock a term deposit in, you won’t be able to change it - you can’t add more funds, snag a new interest rate or bag some bonus offers to boost how much interest you earn. So before you commit, crunch the numbers with our handy term deposit calculator and work out just what the return on your savings will be and if it will meet your savings goals.
How do I apply for a term deposit?
When you’ve got everything you need, you’re ready to apply. It’s generally pretty easy to do - usually you apply online, over the phone or in a branch, depending on which bank you choose.
Our guide on bank term deposits is a great place to start for some examples of where you can go to find term deposit offers, otherwise why not take our term deposit search tool for a spin and find all the best term deposit offers applicable to your situation. To kick off your application with the provider of your choice, simply click on the blue 'go to site' button.