Are Term Deposit accounts worth it?

Although a term deposit account tends to earn high interest, you can’t access your funds for a long time.

A term deposit is a type of account that is interest-bearing as you’d need to keep your money in there for a certain period. Essentially, the longer the money is in the account, the more interest earned. 

However, you must prepare to keep the money for a long time. Withdrawing fees from a term deposit account may incur large fees. You may choose a range of 1 month or 5 years with Commonwealth. This set timeframe can help you fix your interest rate and avoid market fluctuations.

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When are term deposits worth it?

Term deposit accounts are interest-earning.  They have advantages compared to other types of accounts. Therefore, they may suit you depending on your financial goal and spending habits.

– They earn high interest

– They earn stable returns

When are term deposits not worth it

There are multiple options for building wealth, which is why term deposits may not suit everyone.

– Maintaining a good interest rate requires a longer-term deposit term.

– Early withdrawal penalties can be large.

– They may have high minimum deposit amounts.

How term deposit accounts can fit into your financial plan

Term deposit accounts are a great way to essentially earn money for leaving your funds alone. High-interest rates are guaranteed as opposed to other accounts. 

They’re not suitable for spending or everyday purchases. That’s when a checking or savings account is better suited to your needs. However, if you plan on saving for a mortgage, term deposits may help you reach that goal.  Although they’re beneficial for big investments and purchases, it shouldn’t be your only savings option.

Read more about the difference between Savings and Checking accounts with Tippla!