Is a Term Deposit a better way for you to save?

Whether you’ve been on a savings buzz for a while or you’re just getting to a point where making regular savings is a reality, here’s an important question for you:

How could I get more out of my savings?

Statistics show that people under 35 aren’t putting their savings in Term Deposits as much as the generations before them[1], whether that’s because they don’t want to “lock” their savings away, or perhaps because they’re unaware of the benefits of a Term Deposit.

Here’s what you need to know about Term Deposits, including how they could help you grow your savings faster than if you have your money in a savings account.

First off, what are Term Deposits?

A Term Deposit is when you put a lump sum of money away into an account for a fixed amount of time. The idea is by putting the money away without access to it, you’ll receive a higher fixed interest rate than a traditional savings account where you could access your money more easily. 

Term Deposits are investments with fixed returns – that means you know exactly what you’ll be getting. You choose your term (how long you want to put your savings in the Term Deposit for, from 30 days to five years), and choose how you’d like your interest paid out.

For example, you can choose to have your interest paid at maturity (when your term ends), or for terms six months or longer you could have your interest paid to you as regular income. You could also choose to have the interest earned added to your Term Deposit each quarter, 

so you can earn interest on that interest as well as on your original amount – this is called compounding interest.

Benefits of a Term Deposit

  • You can choose a term of as little as 30 days, or up to five years – whatever fits with your savings timeline
  • There are no fees
  • You can open a Term Deposit with as little as $5,000
  • When your money is locked away, it can help you avoid that temptation to dip into your savings
  • Your rate of return is often higher than a traditional savings account
  • You can receive monthly interest on terms of six months or more if you need something to supplement your everyday money


Some practical examples of saving with a Term Deposit

Over the past year or so Alice has saved $18,000, which she’s pretty pleased about. However she’s starting to get itchy feet, and sets a goal to quit her job in six months, and travel around the world for a while. She wants to make sure that she saves as much as she can before she goes, without dipping into her savings – so she starts to explore a Term Deposit.

Here’s a look at what her returns could be with a Term Deposit compared to her savings account2.

Type of account

Interest earned before tax

Interest earned after tax

Final balance after six months (after tax)*

Online Bonus Saver




Term Deposit: Paid at maturity




Term Deposit: Compounding quarterly




Want to find out more? 

Check out more information about growing your savings with a 

Westpac Term Deposit 


[1] Source: Money Management

Calculations above based on: Term Deposit six-month term at 3.45% p.a. Online Bonus Saver at 2.10% p.a. (being 0.10% p.a. base rate + 2.00% p.a. bonus rate ) if Alice deposits 1 cent per month and makes no withdrawals for the entirety of the 6 month period. *Calculation based on a 17.5% RWT (Resident Withholding Tax).