Business owners have different challenges in their day-to-day operations but many share the wish to tuck away surplus cash into a low-risk investment when required. 

While leaving spare funds in the transaction account used for everyday business banking is one option, a term deposit (TD) can also be a relatively low-risk place for a business to grow its cash. For an overview on TD features, you can read this quick guide

What’s a term deposit?

It's an account where money you don’t require immediate access to is invested for a fixed term at a fixed rate of interest for that term. Only an authorised deposit-taking institution such as a bank or credit union can offer TDs. APRA publishes a list of these institutions on its website.

Is a TD right for you? 

A business may want to consider a TD to park surplus funds not required for use in the coming months, and earn a competitive rate of interest which is fixed over this period of time.

Consider a TD if your business requires: 

  • A low-risk, cash-only investment in your portfolio
  • A saving strategy for small or large amounts  
  • Fixed rate of return on the money invested 
  • Time to consider how to use your cash
  • A safe spot to lock away funds from spending 


  • Low risk
  • Competitive fixed interest rates
  • Known rate of return for the initial term
  • A range of terms and interest options to choose from
  • No monthly account fees 
  • Simple and quick to set-up
  • TDs up to $250,000 per account holder per authorised deposit-taking institutions are guaranteed by the Federal Government

What to consider

  • If you require access to funds before your TD maturity, you must provide 31 days’ notice and prepayment costs may apply
  • Sometimes, authorised deposit-taking institutions offer special interest rates to attract new customers. These special rates can drop when the TD comes to the maturity date and a lower interest rate would apply if you reinvested for the same term
  • The interest rate is fixed (market rates may go up while your money is locked away)
  • More money can’t be added to the initial amount until the term ends 
  • You may be required to open a deposit account as well as the TD 

How much can you invest? 

Typically, minimum investment amounts start at $5,000 and rates are advertised to $2,000,000, however higher investment amounts are available. These thresholds can vary between authorised deposit-taking institutions and information can be found online on providers' websites.

For how long?

Terms are generally one month to five years, but this can vary between authorised deposit-taking institutions. You can find this information online on providers' websites.

At what interest rate? 

Interest rates and terms vary and can be found online on providers’ websites.

CommBank Term Deposit rates and fees

How to choose a TD

TD rates and terms vary and you can read more on this online on providers' websites. To help decide whether a TD is the right investment for you and what features to consider, ASIC has published a guide on its website.

What to do when it matures

When your TD is maturing, banks will usually contact you to explain what your options are and you'll have to tell them what to do with your TD.

If you do nothing, your TD may be closed, placed in the holding facility of your account, or be automatically reinvested for the same term at the interest rate available on the maturity date. This can be significantly different from the previous interest rate.

Interest frequency

Interest can be paid at certain intervals during the investment and/or at maturity. The most common option is interest paid annually for long-term deposits and at the end of maturity for short- to medium-term deposits.

Required for application

  • Personal details, such as address, name of the account and phone numbers
  • Details on how many people will be the owner of the TD account
  • Your transaction account details (to fund the TD), tax file number and identification, such as your driver licence
  • Information required may vary so check with the providers' websites

Things you should know

The target market for this product will be found within the product’s Target Market Determination, available here.

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. You should consider seeking independent financial advice before making any decision based on this information.