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Can you negotiate term deposit rates?

  • May 06 2020
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Can you negotiate term deposit rates?

By Zarah Mae Torrazo
May 06 2020

Getting the best interest rate is the key to making extra money in the long term. It may come as a surprise, but negotiation is one of the best ways to maximise your term deposit rate.

Can you negotiate term deposit rates?

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  • May 06 2020
  • Share

Getting the best interest rate is the key to making extra money in the long term. It may come as a surprise, but negotiation is one of the best ways to maximise your term deposit rate.

term deposit rates

One of the main things to look for when choosing a term deposit account is a competitive interest rate. 

A term deposit is a type of investment in which you deposit your money in a financial institution for an agreed period of time. It is considered to be a safe and low-risk investment because it offers a guaranteed return through a fixed term interest rate. Once the term is over and it reaches maturity, you will receive the interest on the amount you have invested. 

Getting the best interest rate is the key to making extra money in the long term. It may come as a surprise, but negotiation is one of the best ways to maximise your term deposit rate. Read on to know how you can get the best interest rate for your term deposit. 

Can I negotiate my term deposit interest rate? 


The answer is yes. But remember that the key to negotiating your term deposit rate is the minimum deposit you will make when you open your account. 

There are plenty of banks that will be open to negotiation when it comes to term deposit rates, particularly for higher balances. A majority of financial institutions indicate that they welcome negotiation of rates on deposits that are $100,000 and above. 

Do not be discouraged if your deposit is lower than $100,000. If your deposit is still near the mentioned amount, it may still be worth your while to discuss your situation with your bank and ask for a higher interest rate. In some cases, banks will give your term deposit rate a few extra points of interest. You may also get bonuses and special offers. 

term deposit rates

To learn more about term deposit interest rates, click here.  

What is the best interest rate for a term deposit?

Before attempting to negotiate with your bank, you should know what interest rate will be best for your term deposit.

Interest rates on term deposits change as the cash rate moves up and down. Competition in the market also affects interest rates. 

To know the best interest rate for your term deposit, you should understand how interest rates are applied on your money. 

There are three factors that determine the interest rate of term deposits. These are: the size of your deposit, the duration of the term and the frequency of interest payments. 

Term deposits vary in duration from a few months to five years or more. A shorter term will get a lower interest rate, while a longer term tends to get a higher rate. 

For example, a $10,000 term deposit with a one-year period and interest paid at its maturity might receive an interest rate of 2.00 per cent. This rate can change by just changing the frequency of interest payment. If the same $10,000 term deposit with the same period has interest paid per quarter and not at its maturity, it might get a fixed interest rate of 1.80 per cent. 

Taking into consideration these three factors can help you find the best interest rate for your term deposit. 

Tips to get the best term deposit rate 

Negotiating your term deposit rates is one of the most straightforward ways to get a higher return on your money. Additionally, here are are some tips to help you boost your term deposit rate: 

Know the market 

One of the best ways to get a better deal on the fixed term deposit rates is to “shop” and look at what different financial institutions are offering so you can know the market and compare term deposit rates. Being knowledgeable about the current rates will help you in your negotiations with your preferred bank or institution. 

Consider depositing in a smaller bank

For most financial products such as loans and everyday transactions, big banks might be the first option that comes to mind. But smaller banks tend to offer more competitive interest rates on term deposits, as they look to widen their market share. Furthermore, these small money market players often have lesser overhead expenses to pay, so they can offer better rates to customers compared with big banks. 

Reconsider your interest payments

As mentioned, your interest payments can have a great impact on your deposit rate. You can opt to receive your interest monthly, quarterly and annually or at the end of the term. Banks usually offer a higher interest rate if you choose to get paid at maturity. Making this choice can help you see a term deposit rate increase of 0.10 per cent or higher. 

Choose a longer term

Banks tend to offer more competitive rates on long-term deposits. Having a longer term means they have access to your funds for a longer period, helping them better manage their own cash flow. If you can stash your money and have no need for it in the near future, consider increasing your term length from 12 months to between three and five years. This will help you get a higher interest rate for the duration of the term. But don’t commit to a five-year term unless you don’t need the money before the deposit hits maturity. Withdrawing early will result in you incurring an early withdrawal fee, a lower interest rate or both. 

Inquire about a rate-matching option 

Rate-matching is something you will not receive if you don’t ask. If you found a competitive term deposit rate in the market, some banks are willing to match or even outdo the rate if you open your term deposit with them instead. The key is to discuss it with them. If they can’t match the rate, some banks can offer you additional rewards if you do your business with them. 


You may feel intimidated to negotiate with your bank but remember that it won’t hurt if you ask them to sweeten the deal. You might be pleasantly surprised by what interest rate you end up with. 

Getting the highest interest rate possible is the secret to making the most of your term deposit. A few extra points in your rate can add up to extra dollars in your pocket.

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