Term deposits (TD) are investments with a fixed return, which is due to be paid on a pre-specified date. This is referred to as a term deposit maturity date. Most institutions will give you at least one week’s notice before the maturity date of your term deposit, but it can be good practice to note the date in the diary. 

You can then choose to either take the payment or to put it back into the TD for a longer period. Some of your options include the following:

  • Hold the amount until you make your decision
  • Make a partial withdrawal and reinvest the balance
  • Renew the deposit for an additional period
  • Make a full withdrawal
  • Top-up and renew the term deposit. 

Term deposit maturity definition

When you open a term deposit, you choose how long you want to lock away your money for. The term varies between one month and up to 60 months. Once the deposit account is open, the money is locked for the chosen period.

The term deposit ‘matures’ at the end of the period. Upon maturity, the initial investment, along with the interest, is credited to your account. 

Let’s now look at the different options that are available for matured term deposits.

  • Place the amount in a holding facility until you make your decision

You can hold the amount for a brief period after the maturity date. However, if you don’t take any action, the institution may roll over the entire amount into a new deposit for the same period. The interest is paid at the current rate when the new TD is opened. Though this may be a good way to build your savings, the current rate may not be competitive. 

  • Make a partial withdrawal and reinvest the balance

You can withdraw some of the total term deposit maturity amount to make some purchases or invest it elsewhere. The balance amount is reinvested in a new TD for your chosen period.

  • Renew the deposit for an additional period

You can either renew the deposit with the current bank or shop around for another one that may offer more competitive rates. Generally, the longer the period, the higher is the interest rate; however, this may not always be the case. It’s worth spending some time to do your research before you renew the deposit.

  • Make a full withdrawal

Another option is to withdraw the entire amount to invest elsewhere Alternatively, you could withdraw the money and open a high-interest savings account. 

  • Top-up and renew the deposit

 When you renew the deposit, you can also choose to add to your initial investment if you have spare savings. This could result in you earning more interest.

Can I withdraw my money before the term deposit maturity?

Once a TD is opened, you’re not allowed to withdraw it before the maturity date. This ensures you aren’t tempted to use the money elsewhere.

While early withdrawal is difficult, it isn’t impossible. You’ll often need to give notice to the institution and also pay the prepayment costs. The interest is also recalculated, and sometimes you may have to repay a portion of the interest already earned on the deposit.

It’s easy to forget to keep track of your term deposit because of the set-and-forget nature of it. Preparing for the maturity date can help to think ahead about what you want to do with your savings