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Term deposits versus savings accounts.

Saving money should be a simple process for Australians, but it can sometimes be difficult to work out which option may be best suited to a particular consumers’ needs. After all, there are all sorts of different places you can keep your cash, and each of these offers a slightly different set of benefits.

For example, two popular products are savings accounts and term deposits. We take a look at these account types below, so you can decide which is better suited to your needs.

Term deposits.

The right term deposit [1] can be an incredibly useful tool for consumers, providing a secure and simple option when it comes to saving. In essence, a term deposit is a special type of bank account that is opened for a set period of time (the ‘term’), which could be anywhere from three months to five years, and with an interest rate that is fixed at the start of the term. At the end of the agreed term (‘maturity’) you’ll then have access to your initial deposit plus the interest you earned; you’ll either receive your interest at the end of the term (maturity) or monthly, depending on the type of term deposit.

A fixed interest rate is one of the big appeals of a term deposit, it provides a guaranteed rate of return during that fixed term, regardless of what rates may do in the market. This protection – as well as the fact that the Australian government [2] guarantees deposits of up to $250,000 – makes term deposits an incredibly stable investment.

However, the security of a term deposit does come with a few restrictions that you might want to consider before putting your money into this type of investment. Firstly, it’s important to understand that for a term deposit [3] to truly benefit you, the money cannot be accessed until the end of the specified period. If you do need to take any cash out of the deposit before it matures, you may incur a fee and could lose the interest you’ve accrued.  Plus, many term deposits will have a notice period to withdraw early. In addition, you won’t have the flexibility to make additional deposits and add to your overall balance. For these reasons, if you need a product that offers more control over your money, a savings account may be the better option for you.

Savings accounts.

By far the most popular way to save money in Australia is with a savings account [4]. There’s a lot more variation in these accounts than there is with term deposits, with a range of options designed to suit any and every need. The core difference, however, is that savings accounts offer much more flexibility, with the ability to move money into or out of the account as is required.

This can be incredibly useful if you know that you may require a bit of extra cash at some point in the future, but still want to save in the meantime. On the other side of the coin, a dedicated savings account makes it easy to deposit a set amount every month, and add to the overall balance that accrues interest. Savings accounts also don’t typically require a minimum deposit, which term deposits often do.

Of course, it’s also worth keeping in mind that the interest rate you’ll get with a savings account will usually not be as high as with a term deposit. This means that if you know you won’t need to touch your savings, don’t necessarily need to make ongoing deposits and want to get the most out of a set amount, a term deposit may be the most suitable option for you.

Regardless of which type of saving is best for you, the team at Beyond Bank can help you find the perfect option. Get in touch today [5] to find out more.


This information has been provided without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness, having regard to your objectives, financial situation and needs.
Beyond Bank Australia, a trading name of Community CPS Australia Ltd, 100 Waymouth Street, Adelaide, SA 5000 (ABN 15 087 651 143, AFSL / Australian Credit Licence 237856)