Term Deposit (Festgeld)

What Festgeld is

Festgeld (term deposit, also Termineinlage or Sparbrief) is a savings deposit with a contractually fixed maturity and guaranteed interest rate. Typical maturities range from three months to ten years. During the term the investor cannot access the capital — or only against an early-withdrawal penalty — but the interest rate is locked in at inception and cannot be cut unilaterally, unlike variable Tagesgeld.

In Austria the legal basis is the Banking Act (BWG) together with the Deposit Guarantee and Investor Compensation Act (ESAEG). Deposits are insured up to €100,000 per customer per bank.

Conditions as of June 2026

Following the ECB's 5 June 2026 meeting, which cut the deposit facility rate to 1.75%, the Austrian and German term-deposit market shows the following range:

• 3 months: 1.8-2.2% per year
• 12 months: 2.0-2.5% per year
• 24 months: 2.1-2.7% per year
• 60 months: 2.3-3.0% per year

The yield curve is therefore only mildly upward-sloping — the term premium for longer maturities is currently around 50-80 basis points. In a phase of expected rate cuts, a laddering strategy can pay off: splitting the capital across several maturities (say 1, 2, 3, 4, 5 years) so that one-fifth is freed up for reinvestment each year.

Comparison with bonds

Functionally Festgeld resembles a corporate bond without price risk and without a secondary market. Three differences matter:

1. Credit risk: With Festgeld the investor bears the credit risk of the individual bank, protected only up to €100,000. Government bonds or covered bonds (Pfandbriefe) can carry materially lower credit risk.
2. Liquidity: Bonds trade every day on exchange; Festgeld generally does not.
3. Price risk: Bonds lose market value when rates rise; Festgeld does not — the investor always receives the principal at maturity.

Tax treatment

As with Tagesgeld, interest income is subject to KESt at 27.5%. Austrian banks withhold the tax automatically. With German providers (Klarna, Renault Bank, MoneYou) the Austrian investor must self-declare the interest in the income-tax return — failing to do so triggers late-payment surcharges and, potentially, fiscal-criminal proceedings.