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Guidance

Term Deposit maturity: What are your options?

Term Deposit maturing? Here are 5 things to consider

A Term Deposit can offer a secure investment option, but it’s important to have a strategy in place for when it matures.

In this article we’ll cover:

  • Your options at maturity
  • Interest rate considerations
  • Superannuation tax considerations
  • Early withdrawal costs and fees
  • How to keep track of your CommBank Term Deposit.

You generally get a week’s notice before your term deposit matures, but it depends on who you are invested with – so make a point of checking the notice period. 

Not keeping an eye on the maturity date could mean it automatically renews for the same fixed term as before at the interest rate that applies on that day. The risk with this approach is that it may be reinvested for a term that doesn’t suit you, or at a rate that isn’t giving you the best return.

In some cases the Bank may instead transfer the funds to your account’s holding facility when it matures to give you more time to decide what to do with your investment. We may do this, for example, if we believe you may be able to benefit from greater flexibility by moving the funds to other fixed terms with better rates.

While in the holding facility the interest rate is fixed for each seven day period until we receive further instructions from you, but the funds are available at call. 

What are your options at maturity?

When your Term Deposit matures you can choose to:

  • Leave it to automatically roll over for the same term as before, or into the holding facility 
  • Proactively renew it for another term of one month or more
  • Top-up and renew the new balance for another term of one month or more
  • Withdraw a portion of your term deposit e.g. interest earned and reinvest the rest
  • Withdraw all the money in the account

With so many options, it can be tricky to decide on the best strategy for you. A good starting point is to ask yourself one question – do I need this money soon? Your answer will give you guidance on what to do next.

Check the interest rate

Often, the longer the term, the higher the interest rate; but that may not always be the case. And don’t assume when you renew or invest a portion of your Term Deposit, you’ll continue to receive the same rate as when you first opened it. 

That’s not necessarily going to mean you’re worse off – you may actually get a better interest rate. You can find our current Term Deposit rates here.

Superannuation tax considerations

You may choose to invest in a Term Deposit as part of your superannuation strategy. Although your money is locked away for a certain period of time, it’s typically only taxed at 15% rather than at your current marginal tax rate. 

If this is something you’re interested in, it’s probably a good idea to chat to a Financial Planner, who can answer questions and help with your super strategy. 

Early withdrawal costs and fees  

Changing your mind can be costly. You need to give 31 days’ advance notice to withdraw from your term deposit before the maturity date, and you may also need to pay early withdrawal (prepayment) costs and fees if you choose to withdraw your term deposit before it matures. 

So think carefully before you choose to open a Term Deposit or reinvest all, or part, of your money at maturity. 

Getting the maximum benefit from a Term Deposit means locking it away. The downside to this is your money isn’t readily available to invest elsewhere if an opportunity arises, or simply for you to spend on some unplanned event.  

Keeping track is key

It’s crucial to keep track of your term deposit, rather than choosing to set then forget about it. You can easily monitor your CommBank Term Deposit in NetBank, and choose to renew, top-up or withdraw it there too. 

If you’ve got a term deposit with us you can also opt-in to get free alerts (email, SMS or a notification in NetBank) before it matures. This will give you time to consider what you want to do with your money when your deposit matures. 

You can also ask us at any time before your Term Deposit matures to place your funds in the account holding facility when it matures.

 

 

 

As this advice has been prepared without considering your objectives, financial situation or needs, you should before acting on this advice, consider its appropriateness to your circumstances. General information and Terms and Conditions for Term Deposits and Electronic Banking are available here or from any branch of the Commonwealth Bank. Please view our Financial Service Guide (PDF68KB). Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. Interest rates may vary at any time without notice.