Can you add more money to a term deposit once the term has started? The short answer is generally no. With most term deposits, except during any grace period on opening or rolling over a term deposit offered by a particular provider, you can’t make additional deposits until the term ends. This is one of the main differences between a term deposit vs savings account.
Term deposits are set for a specific period (the term length), with the principal you deposit earning a fixed interest rate. However, there may be some alternative strategies to consider if you're looking to grow your savings through term deposits.
When can you add money to a term deposit once it’s started?
Some term deposit providers in Australia offer a grace period on term deposit openings or rollovers (when your term length ends and you roll over the funds into a new term deposit) that allows you to add more money once the term has started.
But generally, once your commitment amount or principal is “fixed” and you’ve committed to a term length, you are no longer able to add money to your term deposit, change the term length or withdraw funds without potentially facing early break costs (unless you’re facing proven financial hardship).
The terms and conditions across different term deposit providers will differ, so you may wish to do your research before committing to a provider.
Laddering as an alternative option
If you have additional cash you’re looking to save and earn interest on but can’t add funds to your existing term deposit mid-term, one potential option you may wish to consider is to open another term deposit or deposits.
Laddering is a common term deposit strategy that lets you regularly access portions of your funds while still earning interest on the rest. It works by splitting your available funds across several term deposits with staggered maturity dates.
By opening multiple term deposits, you may be able to take advantage of different interest rates and maturity lengths, so if interest rates rise, you’ll have funds maturing sooner so that you can reinvest at a higher rate. Plus, it may give you more liquidity, if you need it.
This strategy may also be suitable if you’re hesitant about locking all your money away at once, allowing you to earn potentially higher interest on longer-term deposits while maintaining flexibility with shorter-term options.
However, you’ll still need to meet your term deposit provider’s minimum deposit requirement for opening a term deposit for each “rung” of your ladder, commonly between $1,000 and $5,000, depending on the provider. It’s worth noting a laddering strategy requires you to manage more than one term deposit at a time.
Important Information
© Judo Bank Pty Ltd ABN 11 615 995 581 AFSL and Australian Credit Licence 501091 (Judo). The Information on this page (Information) does not constitute personal, legal, investment, taxation, accounting or financial product advice, is provided for general information purposes only, and has been prepared without taking into account your objectives, financial situation, tax position or needs. It is subject to Judo’s disclaimer at www.judo.bank.
Before acting on any Information, you should consider whether the Information is appropriate for you having regard to your objectives, financial situation and needs. You should seek independent financial advice and read the relevant terms and conditions and relevant product documents before acquiring any product.