A term deposit is a type of savings account that has a predetermined time period for investing or saving money. A certificate of deposit is an example of a time deposit because the money is deposited for a specific time frame. Time frames can be as short as one month or as long as 10 years. To determine the best high interest term deposit for your money, several characteristics of the certificate of deposit should be evaluated, including the interest rate, term and deposit requirements.
A useful resource to find the best high interest term deposit is an all-in-one website that gathers data on certificates of deposit. This helps to narrow down options to banks that are paying the highest interest rates. Along with the interest rates, these websites also tend to include information such as the bank name, term of the certificate and the minimum deposit amount required.
After reviewing high interest term deposit rates, consider the term of the time deposit. With a time deposit, there is no access to the deposited money until the time deposit matures. This means that you need to balance earning a high interest rate with a time frame you can go without having access to the money. For example, if you deposit your money into a one-year certificate of deposit, you do not have access to the money for the one-year period.
If money is withdrawn from a time deposit before the maturity date, there are typically penalty fees incurred. These fees are usually a percentage of the amount in the time deposit, but can vary from bank to bank. The problem is that the penalty fees can eat into principal — or initial investment amount — while also affecting the return on investment. This is why it is important to consider the term of the time deposit.
Next, consider the minimum deposit requirement. Minimum deposit requirements can range from $250 to $100,000 US Dollars (USD). Narrow down the highest interest rate term deposits with the term you want to invest the money. Generally, the tradeoff for earning a higher interest rate requires that more money is deposited for a longer term than the lower interest rate options.
Once you gather the information on each high interest term deposit, list out each option with the information beside it. Go through the list and start marking off the term deposits that do not meet all of your criteria. The last one on the list is the best high interest term deposit for you.