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Why you might invest in a term deposit for your business

When you find you have extra cash in your business, you might choose to invest this in a business term deposit. A term deposit is an account where you put away your cash for a nominated period of time – called the “term”. Along with choosing the term, you also lock in the interest rate that you’ll earn on your money.

The benefits of term deposits with Westpac include1:

  • Fixed interest rate – You’ll know exactly how much interest your money will earn at the end of the term
  • Lock your money away – If you’re saving for a longer term investment, you may want to set aside your business savings until you’re ready to invest. Note there is a minimum of $5,000 investment for Westpac term deposits.
  • No set-up, monthly service or management fees (other fees may apply)
  • Ability to renew online – you can renew your term deposit online and sometimes you may be offered a special rate to do so.
  • Term deposits of up to $250,000 are guaranteed by the Australian government when you lodge with an Authorised Deposit-taking Institution (ADI)


The risks of term deposits include:

  • No access to the funds – If you spot an opportunity for your business while the term deposit is locked in, you won’t be able to access your money, except in exceptional circumstances
  • Missing out on higher returns – If you want to invest in the higher returns associated with property and shares, you won’t be able to until your term deposit ends. 


Make sure you consider what you’ll do with your term deposit when the term ends, as to maximise your interest rate, you’ll need to provide specific instructions to your bank on what you want done next.


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Things you should know

1. Terms and Conditions, fees and charges apply with respect to Westpac’s term deposit accounts. This information does not take your personal objectives, circumstances or needs into account. Consider its appropriateness to these factors before acting on it. Read the disclosure documents for your selected product or service, including the Terms and Conditions or Product Disclosure Statement at Business Term Deposits - Terms and Conditions, before deciding. Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.


This article is an overview only and should not be considered a comprehensive statement on any matter or relied upon. Consider obtaining personalised advice from a professional financial adviser and your accountant before making any financial decisions in relation to the matters discussed in this article, including when considering tax and finance options for your business.