Before opening a personal term deposit account, you’ll need to meet a few key requirements. Depending on the authorised deposit-taking institution (ADI) that is the term deposit provider, you may need to be at least 18 years old to open an account with the ADI and will require identification documents such as your passport, Medicare card and/or driver’s licence. Financially, you’ll need to meet the minimum deposit requirements of the ADI you’ve chosen (commonly between $1,000 and upwards of $5,000).
Key points covered
- Eligibility requirements
- Application process
- Account details
Eligibility and required documentation
Eligibility and requirements to open a term deposit account in Australia vary between ADIs, but some of the more common requirements could include:
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Age. You may need to be at least 18 years old to open a term deposit account. This is a standard requirement across most Australian ADIs.
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Residency status. You may need to be an Australian resident for tax purposes, with a permanent Australian residential address (some ADIs do allow foreign investors to open a term deposit, however, so check the ADI’s terms and conditions).
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Identification documents (ID). To verify your identity, you'll need to provide the ADI with the forms of ID the ADI requires. Read the ADI’s terms and conditions to work out what is needed. Commonly accepted documents include a current Australian driver's licence, passport, and Medicare card
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Tax File Number (TFN). While providing your TFN is optional, doing so will help you avoid having tax deducted from your interest at the highest marginal rate.
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Nominated bank account. You’ll also need an Australian bank account to receive your interest payments. The account must be in your name (or names, if it’s a joint term deposit application). Be aware that some ADIs require you to already have another type of linked account with them before you can open a term deposit.
A mobile number and email address may also be required for verification and correspondence purposes.
Application process
The steps for opening a term deposit can vary depending on the ADI. If it’s possible to open the term deposit online, completing the application online should be relatively fast if you have the required ID handy when filling out the application.
Once you’ve read and agreed to the terms and conditions and submitted your online application, you should receive account details (if approved). You’ll then need to fund your term deposit within the funding window required by the ADI (e.g. within 10 days of account opening), and a confirmation will typically be sent to you once the term deposit is all set up.
Account details
When opening a term deposit, there are a few important decisions to make about how the account will be set up and managed.
Choosing between individual or joint accounts
You can open a term deposit as an individual or as a joint account with another person. An individual account means you are the sole owner of the account and have full control over the funds. A joint account allows two or more people (often partners or family members), depending on how many joint holders the ADI allows to open a term deposit, to share the ownership of the deposit.
In a joint account, all parties typically have access to manage the deposit, including making decisions about maturity instructions and withdrawals. It’s important to note that all applicants must meet the eligibility requirements and provide separate identification and contact information.
Maturity instructions
At the end of the term deposit, you'll need to decide what happens with your funds. Term deposit providers will usually ask you to provide maturity instructions upfront, but you can change these later, provided you meet the ADI’s cut-off times for changing maturity instructions.
At maturity, some of your options include
- Rolling over the principal and interest into a new term deposit
- Rolling over just the principal, while withdrawing the interest
- Fully withdrawing both the principal and interest
Many term deposit providers offer a grace period on maturity, giving you a short window to update or adjust your maturity instructions. Be aware that different ADIs will have different grace periods.
FAQ
What if my term deposit application is denied?
If your term deposit application is denied, the ADI will typically give you a brief explanation. Common reasons include not meeting ID requirements, having insufficient funds to fund the term deposit or to meet any minimum opening requirements, or not meeting certain eligibility criteria set by the ADI. If this happens, you can review your application and reapply, or seek to apply with a different ADI. If you believe the decision was unfair, you can reach out to the Australian Financial Complaints Authority to make a complaint.
Important Information
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