What Happens When a Term Deposit Matures?

When your term deposit matures, you have a short window - typically 1-10 calendar days - to decide what to do with your money. Miss that window, and your bank will likely auto-roll the deposit at whatever rate they're currently offering, which may be significantly less than the best rate on the market. Here's how to handle maturity to get the best outcome.

Your Three Options at Maturity

Option 1: Withdraw Everything

Your principal plus all earned interest is transferred to your nominated linked account. This is the simplest option if you need the cash or want to move it elsewhere.

How: Log into your banking app or call the bank during the grace period and select "withdraw at maturity" or "do not renew."

Option 2: Roll Over the Full Amount

The full balance (principal + interest) is reinvested into a new term deposit. You can usually choose a different term length.

How: Contact your bank during the grace period and specify the new term. Compare the offered rate against competitors before deciding.

Option 3: Partially Withdraw

Take out some of the funds and roll over the remainder. This is useful if you want access to some cash but still want to earn term deposit rates on the rest.

How: Not all banks offer partial withdrawal at maturity. Check with your bank. If they don't, you'll need to withdraw everything and open a new, smaller deposit.

The Auto-Rollover Trap

This is the single most important thing to understand about term deposit maturity: if you do nothing, your bank will automatically roll over your deposit.

Why this matters:

• The auto-roll rate is almost always the bank's standard rate, not a promotional or new-customer rate
• You might get rolled into the same term length even if a different term now offers a better rate
• You lose the opportunity to shop around and potentially move to a higher-paying bank

Example: You matured a 12-month deposit at 4.80%. If you do nothing, the bank auto-rolls at their current 12-month rate, which might be 4.40%. Meanwhile, a competitor is offering 5.00%. By not acting, you've lost 0.60% for the next year. On a $50,000 deposit, that's $300 in lost interest.

Grace Period by Major Banks

Grace periods can change. Confirm with your bank.

How Interest Is Paid at Maturity

For term deposits of 12 months or less, interest is typically paid at maturity. For longer terms, interest may be paid annually or at maturity, depending on your arrangement.

Tax consideration: Interest is assessable income in the year it is received or credited. For a 12-month deposit maturing in July, the interest falls into the new financial year.

A Maturity Checklist

Two weeks before maturity:

• Check the current rate your bank is offering for your term
• Compare against rates at other banks (see our Best Term Deposit Rates)
• Decide: withdraw, roll over (same bank), or move to a competitor

During the grace period:

• If withdrawing: confirm funds have landed in your linked account
• If rolling over at the same bank: confirm the rate and term
• If moving to a competitor: open the new TD and transfer funds

After action:

• Set a new calendar reminder for the next maturity date
• Record the new rate, term, and maturity date

What if You Need to Withdraw Early?

If you need your money before the term ends, you can request an early withdrawal - but it comes at a cost:

• Reduced interest rate: Most banks will pay a reduced rate (often the base rate minus a penalty percentage) for the period the money was held
• Notice period: Some banks require 31 days' notice for early withdrawal
• Full loss of interest: In some cases (particularly very short terms), you may forfeit all interest earned

Example: You hold a 12-month TD at 4.80%. After 6 months, you need the money. The bank applies a penalty rate of 2.00% for the 6 months held. Instead of earning ~$1,200 on a $50,000 deposit, you earn ~$500. That is a $700 cost for early access.

If there is any chance you will need the funds, consider a term deposit ladder or a high-interest savings account instead.

Plan Ahead - Don't Let Auto-Rollover Decide for You

Term deposit maturity is a critical moment that most people overlook. The auto-rollover default almost never gives you the best deal. Set a calendar reminder, compare rates before maturity, and actively choose the best option. The 15 minutes it takes to compare and act can be worth hundreds of dollars in additional interest over the next term.

Related Guides

• Term Deposit Laddering Strategy - how to structure your TD portfolio
• Best Term Deposit Rates - compare today's highest rates