Don’t Let a Term Deposit Roll Over by Accident

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You put some money into a term deposit, choose a six or 12-month term, and then get on with everyday life. Months later, the maturity date arrives and the money may automatically be placed into another term deposit if you haven’t given your bank different instructions.

Automatic renewal can be convenient, but it isn’t always what you want. Your circumstances may have changed, you may need access to the money, or another bank may now be offering a different interest rate.

The important date is the maturity date. Check your original paperwork or online banking and find out exactly what happens when the term ends. Some banks provide a window around maturity during which you can give new instructions without the money being locked away for another term.

Don’t assume the interest rate will remain the same, either. A new term deposit is generally subject to the rate available at the time it rolls over, rather than necessarily keeping the rate you originally received.

Think about whether you’ll actually need the money soon. Perhaps you’ve been planning a home improvement, helping a family member or simply want to keep more of your savings accessible. Locking the money away for another year may not suit your plans.

If you don’t need immediate access, compare the available options before the maturity date. You could decide to renew for a different length of time, move some of the money elsewhere, or leave it in an account that provides easier access.

It can also be useful to compare the return with what you’re currently earning on your other savings. Don’t look only at the advertised interest rate. Check the term, conditions, and whether there are restrictions on accessing the money early.

Set yourself a reminder a few weeks before the maturity date. That gives you time to review the options instead of making a rushed decision after the deposit has already renewed.

A term deposit is designed to take some of the guesswork out of saving, but “set and forget” isn’t always the best approach. Your money and circumstances can change while the deposit is sitting there. When the maturity date appears on the calendar, give your savings another look before letting them roll over automatically.