Types of Term Deposits
By Alterna Team
February 07, 2022

When it comes to investing in guaranteed, low interest accounts, a term deposit is a great choice to know your money is safe, protected, and working for you. Whether you have short-term or long-term savings goals, there is a term deposit that will provide you with the security and flexibility you need.

What is a Term Deposit?

A term deposit is an investment account that guarantees a fixed interest rate over a pre-determined amount of time. Though they are fixed terms, these investments offer the flexibility to pick an option that makes the most sense for your unique needs. Not sure how to make a term deposit work for you? No problem. We’re here to show you how the flexibility of a term deposit can be the right savings tool for your balanced portfolio.

Pick your term length

Term deposits must be locked in for a certain amount of time, but you can pick the term-length that makes the most sense for your needs. Term lengths start at 30 days and can be locked in for up to five years – typically, the longer it’s invested, the higher interest rate you will get.

Pick your interest rate type

The interest rate you lock in at will determine how much money you’ll have when the term ends. You can choose from these types of interest rates:


This means you have an exact interest rate you can count on to add to your investment when your term deposit matures. The benefit of a fixed rate is knowing exactly how much your investment is going to gain over time.


With an escalating interest rate, the rate of interest increases annually, to a predetermined amount, every year you have your money invested. Escalating interest rates are a good choice if you plan to keep your money in the term deposit for a longer period but still want the protection of a guaranteed interest rate.


This type of product is linked to the performance of a specific market index or group of stocks. Market-Linked term deposits guarantee the original investment amount, and will typically provide a minimum guaranteed return. While the final return will be unknown until maturity, investors can benefit from the potentially higher returns that a Market-Linked term can provide.

Pick your access

Many term deposits are locked and untouchable until the maturity date. However, there are a few options that provide the additional flexibility of accessing them before the term is over.


If you’ve put your money in a redeemable or cashable term deposit, you will be able to take the money out before it matures. Interest will be paid for the duration that the term deposit was held.


If your money is in a non-redeemable term deposit, it’s untouchable until maturity. These types of term deposits tend to come with a slightly higher interest rate, to make it worth your while to keep it invested. But there is no opportunity to access those funds until the end of the term.

Pick your investment vehicle

Your term deposit is really a passenger and you get to pick the vehicle in which it’s going to travel. You can pick from a variety of non-registered or registered accounts to invest your term deposit.

Non-registered accounts

These accounts are not registered with the government and have flexibility that registered accounts do not, including easy access once the term deposit matures. Investors will pay taxes on any income generated in a non-registered account.

Registered accounts

You can also invest your term deposit in a registered account such as a TFSA or RRSP. These accounts are registered with the government and have their own rules about access and what happens to the money when the term deposit matures. Term deposits put in registered accounts enjoy the benefit of tax-free or tax-deferred gains. The long-term earning potential with a registered term deposit is higher because the money in the account remains untaxed as is grows.

The flexibility of term deposits makes them an excellent addition to your balanced portfolio, providing a low-risk option with guaranteed returns. If you’re not sure what type of term deposit makes the makes sense for your short and/or long-term goals, we’re here to help. Make an appointment and we will walk through our savings solutions and see if a term deposit is right for you.