Savings, term deposits and bonds explained (Australia)
Plain-English basics for people in Australia. This explains how things work and where to check the official rules. It never picks a product for you.
Savings account
Money you can take out any time. The interest rate can change whenever the bank decides. Good for money you may need soon.
Term deposit
You agree to leave money for a set time (for example 6 months or 3 years) at an interest rate agreed at the start. Taking it out early usually costs some of the interest, or is not allowed. The rate is fixed, but rising prices (inflation) can still mean the money buys less at the end.
Bonds
A bond is a loan you make to a government or a company. It usually pays interest at set times and returns the amount borrowed on a set date. In Australia the common types are Australian Government bonds (including Exchange-traded Treasury Bonds on the ASX) and corporate bonds. Some government bonds trade on the ASX like shares; others are bought through a broker or a fund.
- If you sell before the end date, the price can be higher or lower than you paid - bond prices fall when interest rates rise.
- Company bonds pay more interest because the company might not pay back. Check who the borrower is.
- Bond funds never 'end', so their price moves all the time.
What covers a deposit
Deposits with an authorised deposit-taking institution (ADI: banks, building societies, credit unions) are covered by the Australian Government's Financial Claims Scheme up to A$250,000 per account holder per ADI. Check the current details on the FCS site.
This cover applies to deposits with licensed banks, not to funds, shares, bonds you buy yourself or crypto.
Regulator guide: ASIC's Moneysmart: how to invest.
General information, not a recommendation. This page explains how things work. It does not pick a product for you or say where to put your money, and it does not consider your goals or situation. For personal advice talk to a licensed adviser in Australia - a licensed financial adviser (on ASIC's Financial Advisers Register).
Frequently asked questions
- Can I lose money in a bond?
- Yes - if you sell before the end date when rates have risen, or if the borrower cannot pay back. Government bonds of your own country carry less of the second risk.
- Is my deposit covered?
- Deposits at licensed banks are covered up to a limit set by the government scheme in your country; check the official page linked above.
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