What does ‘breaking a term deposit’ early mean
Breaking a term deposit means making an early withdrawal of some or all of your money before the agreed end date of your term deposit. When you open a term deposit, you’re agreeing to leave your savings with us for a set period of time. If your circumstances change and you need access to your money sooner, this is considered breaking the term deposit early.
What to do if you need to break your term deposit early
If you think you may need to break your term deposit (make an early withdrawal), please get in touch with us as soon as possible. Starting the conversation early gives us more time to understand your situation and support you through your options.
In some circumstances, breaking a term deposit early can be approved automatically. These situations are outlined in our Term Deposit Terms and Conditions and relate to specific personal circumstances, providing clarity when you need it most.
If your circumstances fall outside these, an early withdrawal isn’t guaranteed. We’ll carefully review your request on a case‑by‑case basis and explain whether breaking your term deposit early may be approved, and what this could mean for your interest.
Whatever your situation, we’ll take the time to explain what’s possible and guide you through the next steps, so you can make a confident, informed choice. If you’re unsure where you fit, the easiest place to start is by getting in touch. We’re here to help.
Why reduced interest may apply to early withdrawals
When you open a term deposit, you’re choosing to set your money aside for a fixed period. In return, we offer a fixed rate that’s often higher than what you might earn in a savings account. That rate is based on the understanding that your money will stay in the term deposit for the full length of the term.
Because of this, early withdrawals affect how we’ve planned and priced that rate. When money is taken out before the end of the term, we need to reassess the interest to reflect the shorter time your money was invested. Applying a lower interest rate helps keep things fair for all customers.
If an early withdrawal is approved, we recalculate the interest based on how long your money was invested and apply a lower rate to that amount.
How the reduced interest works
If an early withdrawal is approved, an adjustment is made to the interest rate. Firstly, we look at the length of time your money was invested for and we use the interest rate for that period as it applied on the day your term deposit was opened. We then apply a 2% reduction to get your adjusted rate.
If your original rate was 2% or less, the reduced rate will not go below zero.
Any remaining money stays in the term deposit and continues to earn your original interest rate, if it still meets the minimum balance of $2,000 required.
These two examples use the same term deposit amount, term and rate so you can clearly see the difference between a full and a partial withdrawal.
Standard interest early withdrawal example
Full withdrawal
- Deposit amount
- $10,000
- Original rate & term
- 4.95% p.a. for 3 years
- Withdrawn early
- After 6 months
- 6‑month rate at the time you opened your term deposit
- 4.15% p.a.
- Reduced rate applied
- 2.15% p.a.
What this means
Because the whole amount was withdrawn early, your full balance earns interest at the reduced rate of 2.15% p.a.
Impact on interest earned (first 6 months)
- Interest earned at the reduced rate: $107.50
- Interest that would have been earned at the original rate: $247.50
- Difference: $140.00 less interest
Note: Figures are rounded and for illustration only and do not include tax. Actual outcomes depend on the product’s terms, interest rate, fees and how interest is applied.
Partial withdrawal
- Deposit amount
- $10,000
- Original rate & term
- 4.95% p.a. for 3 years
- Amount withdrawn early
- $3,000 after 3 months
- 3‑month rate at the time you opened your term deposit
- 3.50% p.a.
- Reduced rate applied to the $3,000 withdrawn
- 1.50% p.a.
- Remaining balance
- $7,000 continues earning the original 4.95% p.a. (as long as it stays above the $2,000 minimum balance)
What this means
Only the amount you withdraw early gets the reduced rate. The rest of your term deposit keeps its original rate for the full term.
Impact on interest earned (first 3 months)
On the amount withdrawn early ($3,000)
- Interest earned at the reduced rate: $11.25
- Interest that would have been earned at the original rate: $37.13
- Difference: $25.88 less interest
On the remaining balance ($7,000)
- Interest earned at the original rate: $86.63
- This portion is not affected by the early withdrawal
Note: Figures are rounded and for illustration only and do not include tax. Actual outcomes depend on the product’s terms, interest rate, fees and how interest is applied.
Monthly interest early withdrawal example
Full withdrawal
- Deposit amount
- $10,000
- Original rate
- 4.95% p.a.
- Withdrawn early
- After 6 months
- Reduced rate applied
- 2.15% p.a.
What happens if you withdraw early
If you withdraw your entire term deposit early, the entire balance earns interest at the reduced rate. Any extra interest already paid at the higher rate is clawed back from your principal.
Impact on interest earned (first 6 months)
Interest calculation
- Interest earned at the reduced rate: $107.50
- Interest originally paid at the original rate: $247.50
- Interest clawed back: $140.00
Amount you receive
- Deposit amount: $10,000.00
- Less interest clawback: – $140.00
- Amount paid to you: $9,860.00
Note: Figures are rounded and for illustration only and do not include tax. Actual outcomes depend on the product’s terms, interest rate, fees and how interest is applied.
Partial withdrawal
- Deposit amount
- $10,000
- Original rate
- 4.95% p.a.
- Amount withdrawn early
- $3,000 after 3 months
- Reduced rate applied to withdrawn amount
- 1.50% p.a.
- Remaining balance
- $7,000
- Rate on remaining balance
- 4.95% p.a. (unchanged)
What this means
Only the amount you withdrew early is affected. The rest of your term deposit keeps earning interest at the original rate.
You’ll receive the amount you withdraw minus any excess interest already paid on that portion.
Impact on interest earned (first 3 months)
On the amount withdrawn ($3,000)
- Interest at the reduced rate: $11.25
- Interest originally paid at the original rate: $37.13
- Interest clawed back: $25.88
Amount you receive
- Amount requested: $3,000.00
- Less interest clawback: − $25.88
- Amount paid to you: $3,000 however your principal will reduce so $7,000 less $25.88 is $6,974.12
Note: Figures are rounded and for illustration only and do not include tax. Actual outcomes depend on the product’s terms, interest rate, fees and how interest is applied.
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Important: This guide shares general information only and isn’t financial advice. It doesn’t consider your personal goals or situation. If you’d like advice for your circumstances, it’s a good idea to speak with a licensed financial adviser.