Understanding Term Deposits

Use this guide to get a better understanding of term deposits and how they can improve your savings and investment plan.

About term deposits

  • What are term deposits?

    Term Deposits are special accounts for a set amount of money (the "deposit") over a set amount of time (the "term").

    A term length can be as short as 30 days and as long as five years, and anywhere in between. A term deposit of less than one-year is known as a short-term term deposit, and a term deposit of more than one year is known as a long-term term deposit.

    A short-term term deposit usually pays less interest than a long-term term deposit.

  • Why do term deposits pay more interest than chequing or savings accounts?

    The credit union uses the money its members have in term deposits as "security" for loans to other members and for its own investments. The money that the credit union earns in interest from loans and investments is used to operate the credit union and to pay back our members as interest on your term deposits.

    Unlike the money in your chequing or savings account the money in term deposits is "stable": the credit union can use it for its own loans and investments.

  • What happens when the term ends?

    You can choose what you want to do with both the original term deposit amount and the interest you've earned when the term deposit term ends. Options include:

    • transferring the original amount and the interest earned together into your savings or chequing account;
    • transferring just the interest earned into your savings and chequing account and leaving the original term amount into a term deposit of the same or different length;
    • transferring the original amount and the interest earned together into another term deposit of the same or different length or type.

Types of term deposits

  • What is the difference between redeemable, non-redeemable and reinvestable term deposits?

    A redeemable term deposit can be "cashed in" at any time during its term, often without penalty.

    A non-redeemable term deposit cannot be "cashed in" during it's term (though many non-redeemable term deposits can be reinvested on the anniversary date).

    A reinvestable term deposit can be "cashed in" if it will be reinvested immediately in another term deposit, usually of equal or greater length as the original term deposit.

    Tip!A non-redeemable term deposit usually pays more interest than a redeemable term deposit.

  • Should I have a short-term or a long-term term deposit?

    The decision to have a short-term or long-term deposit can depend on whether you think you will need the funds for something else - a major purchase or different type of investment, for example - sooner or later, and whether you think interest rates will rise and fall.

    Tip!A short-term term deposit means you can access your money quickly but it usually pays less interest than a long-term term deposit.

  • Can I have more than one type of term deposit, or term deposits of different kinds?

    Absolutely. In fact, a good savings or investment plan includes different types of terms deposits for different amounts for different term lengths. Term deposits can be used as part of a very sophisticated savings or investment strategy.

    Tip!A popular and effective term deposit strategy is called "laddering". By splitting a larger amount of money into smaller "pieces" and putting some of those smaller pieces into longer term deposits (which earn higher interest) you can, over time, earn a higher amount of interest than if you had invested the entire larger amount in a shorter term. To speak to someone directly about laddering, phone the Member Service Centre at 604-517-0100 or visit a branch.

  • Can I put U.S. funds into a term deposit without converting it to Canadian funds?

    Yes, Westminster Savings has redeemable and non-redeemable U.S. dollar term deposits. Putting U.S. funds into a U.S. dollar term deposit will protect your funds from exchange rate fluctuations.

Choosing the right term deposit

  • Can I have the interest I earn on long-term term deposits deposited into my chequing or savings account before the term ends?

    A popular option for people who want to earn larger amounts of interest with long-term term deposits but do not want to wait until the end of the term deposit to use their interest is to have the interest earned deposited annually or monthly into their account.

  • Can I put the money I have in a RRSP or a RRIF into a term deposit?

    Yes, almost all of our term deposits can be either "registered" (part of your RRSP or RRIF) or "non-registered" (part of regular savings). Of course, if you want to have a registered term deposit you will need to also have an existing RRSP.

    Tip!To open a Registered Retirement Savings Plan (commonly called an "RRSP") or a Registered Retirement Income Fund phone our Member Service Centre at 604-517-0100 or visit a branch.

Buying a term deposit

  • How do I get a term deposit?

    Most term deposits are very easy to set up. The first step is to know what you want: choose the term deposit type and the term deposit length and, as long as you are a credit union member and have the minimum amount of money to transfer to the term deposit account (usually $1,000.00), you can set up a term deposit.

    Online: If you are a credit union member and you know what kind of term deposit you want you can set up most term deposits using online banking yourself.

    By phone: call the Member Service Centre at 604-517-0100; our Member Service Centre agents can provide information about the right term deposit for you and open a term deposit account for you over the phone.

    In person: Any one of our branches can set up a term deposit account for you and provide you with detailed information about how term deposits can improve your savings and investment plan.

    Tip!Do you have a savings or investment plan? Whether you're young and starting out or in your golden years and an experienced investor (or anywhere in-between) let us help you put together a savings or investment plan in language that you'll understand.

    Fill out an online form and we'll have a savings and investment expert contact you within one business day, or visit your branch to speak to a savings and investment expert in person.

  • Do I need to become a member of Westminster Savings to purchase a term deposit?

    Yes. To purchase a term deposit account at Westminster Savings you must become a member of the credit union.

  • Do I need a savings or investment plan to have a term deposit?

    No, you don't need a savings or investment plan to have a term deposit. In fact many people use term deposits as a place to "park" their money and earn higher interest until they decide what to "do" with their money.

    A savings or investment plan can help you plan for your financial future. Phone our Member Service Centre at 604-517-0100 or visit a branch to let us help you set up a savings or investment plan.

Talk to a Financial Expert today.

Our financial experts will answer any of your term deposit questions. Call us at 604-517-0100 or send us your question online and we'll respond to you within one business day.