Want to earn money by doing virtually nothing at all? It sounds like a far-fetched idea, but people everywhere do it all the time through a little thing called: ‘term deposits’. Since they’re fixed (in both interest rates and the term period), term deposits are ideal when you can afford to store away a large sum of money without needing to withdraw any of it before the term is up.

So what factors should I consider in a term deposit?

When you start to compare term deposits, there are so many options available it’s almost like a minefield. Here are 4 features you should look for before you take the plunge:

1) High interest rate. Because term deposits are fixed, you won’t get to touch them until the period expires. Compare term deposits at the same time on websites like mozo.com.au and work out the perfect rate for you.

2) The fine print. Find a financial institution with terms and conditions that are compatible with your situation. Read the fine print and compare term deposits before you make a final decision.

3) Calculation and payment of interest. How will the financial institution accrue interest to your account? This can be monthly, quarterly or yearly and will vary depending on the duration of your term deposit. So it’s smart to compare term deposits and find out.

4) Penalty for withdrawing early. When there are unforeseen circumstances, you might need to access your term deposit, so how much will the financial institution penalise you on early exit fees? How much will your interest be reduced to after an early exit? Compare term deposit penalty rates just to be safe.

How do I choose the right term deposit based on my situation?

Here are 6 things to think about: 1) Interest rates. Again, compare term deposits online and search for one with a high interest rate so your money can earn more interest at the end of the term period.

2) Commitment. If you aren’t financially capable to commit to the term period, don’t apply for an account. If you’re living hand to mouth, then it’s best not to open an account. 3) Minimum balance. Some accounts need a minimum balance of about $10,000 so ensure you can realistically afford this. Compare term deposits to see what’s best for you.

4) Don’t lock it all up. While term deposits are a secure investment, ensure you still have access to a pool of money in case of emergencies.

5) Work out a savings plan. Evaluate your monthly expenditure, compare term deposits, manage your budget and calculate expenses like your rent. This will be another thing on your financial budget so make sure you are fully aware of what it takes open up a term deposit.

6) Be realistic with your term period. Are you sure you can go for six months without accessing your term deposit? Or are fewer months more realistic? Make sure your financial goals are possible.

Where can I compare term deposits?

Comparing term deposits is as easy as jumping online. But there’s no need to go through dozens of websites when someone else has done the work for you. Compare term deposits against certain features on websites like mozo.com.au. It’s easy and you can do it at anytime.