Your Term Deposit Is Maturing. Now What?
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A letter from your bank says your term deposit is about to mature. It might be tempting to let the money roll over automatically and get on with your day, especially if you have used the same bank for years. But that maturity date is a useful opportunity to reconsider whether your savings are still working for you.
When a term deposit matures, you generally have the option to reinvest the money for another fixed period or have it paid into a nominated bank account. Some banks may automatically reinvest your deposit if you have not provided different instructions. The available choices and deadlines depend on your bank’s terms, so check the details before the maturity date arrives.
Start by comparing the interest rate on offer with rates available from other banks. Your existing provider may not automatically give you the most competitive rate, and even a small difference can affect the interest earned on a substantial deposit. Compare equivalent terms and check whether the advertised rate comes with conditions.
Next, consider when you might need the money. Perhaps you are planning home repairs, replacing a vehicle, or helping with a significant family expense. Locking all your savings away for another year may be inconvenient if you need access sooner. Term deposits can restrict early withdrawals, and breaking one may require bank approval or result in reduced interest.
You do not necessarily have to reinvest the entire amount in one deposit. Depending on your bank’s minimum investment requirements, you could keep some money accessible for unexpected expenses and place the remainder into a new term deposit. Another option is to split savings across deposits with different maturity dates, giving you more regular opportunities to review your options.
Before making a decision, check whether your interest will be paid into your everyday account or added to the new deposit. If you rely on that interest to supplement your income, the payment arrangement matters just as much as the headline rate.
Set a reminder a few weeks before your maturity date to review the options and ask your bank any questions. A little attention now can help you avoid being locked into an unsuitable term simply because you missed the opportunity to choose.
