Many of us may not have given that much thought about to maximise our savings. When you have worked hard to save it makes sense to benefit as much as possible and be smart about where you put your money.

In most cases, there are two main options available for those who have a savings goal or want to maximise their return of interest after a few years of saving. This is where Term Deposits and Savings Accounts can help; so, which one do you choose?

Choosing a term deposit or savings account
You may have heard of term deposits, but what are they exactly? Some of you might know people who have invested savings into these accounts which are often products offered by banks, credit unions or building societies. In most cases, your money is invested for a fixed term and you can get a fixed rate of interest over that term1.

When money is deposited into a term deposit, your money is there for a pre-determined period which might range from 1 month to 5 years and the interest rate is guaranteed not to change for that nominated period of time provided that the customer has met all the prior terms and conditions of that particular product2.

On the other hand, a high interest savings account can vary their interest rates based on the discretion of your chosen financial institution; therefore, your rate of return from interest isn’t locked in.

Things to consider  
IMB Bank is an Authorised Deposit-taking Institution (ADI) and can offer both term deposits3 and high interest savings accounts. If you are considering investing in either a term deposit account or a savings account4, the Australian Prudential Regulation Authority has a list of ADIs where IMB Bank is a registered ADI.

Often, financial institutions require a minimum initial deposit amount. This amount may vary from one financial institution to another, and you might like to consider all the options available to you to make an informed decision.

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What to choose when you need a flexible option
With term deposits, there usually is a minimum tenure period and in most cases, this can’t be said for a savings account. However, with a savings account, you may need to keep your money within the account for a given period to maximise the interest paid into the account. This is a great idea if you are seeking flexibility in situations where emergency access to your funds is needed.

With a term deposit, you will need to consider how prepared you are to limit your access to your funds during the term of your deposit. If you encounter an emergency situation where you need access to your savings, consider the potential fees and charges that you may incur for early access to your term deposit.

Invest savings for maximum interest return
If you’re looking to invest your savings for maximum return of interest, you don’t necessarily to have one or the other. In fact, you have the option of using both types of accounts to your advantage. This will allow you to not only have the security of the term deposit, but also, the flexibility of a savings account if you need to access you funds during emergencies. If you play your cards right, you may be able to shift funds from one account to another to maximise your return on interest. This strategy may take some more advance financial acumen which an IMB financial Planner might be able to assist with.

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