Following the Bank of Japan's rate hike to 1.25%, the yields on 1-year, 3-year and 5-year time deposits are compared. The focus is on how to combine current interest rates with investing through maturity.
At its September Monetary Policy Meeting, the Bank of Japan raised its policy rate from 1% to 1.25%. In response, MUFG Bank's Super Time Deposit offered rates of 0.5% for 1 year, 0.8% for 3 years and 1% for 5 years as of 17 September 2026.
A strategy of waiting for the 1-year deposit rate and then reinvesting in a longer-term deposit is under consideration. Assuming a 1-year rate of 0.5%, interest over five years would be ¥5,000, making it a factor in deciding whether a 4-year deposit paying more than 1.125% per year will be available for reinvestment one year later.
Under a plan to divide ¥3 million into ¥1 million each in 1-year, 3-year and 5-year deposits, total interest in the first year would be approximately ¥23,000. The difference from investing the full amount in a 5-year deposit at 1% would be ¥7,000, highlighting the value of retaining flexibility as interest rates rise.
The impact of early withdrawal is also important. If a 5-year time deposit is withdrawn after 1 year, the benchmark rate would be approximately 0.35% per year, calculated as the current 1-year rate of 0.5% × 70%. This makes it difficult to determine whether long-term deposits should be selected based solely on the interest rate when the funds will be needed relatively soon.
Because rates can vary significantly between banks even for the same 1-year deposit term, it is recommended that rates at other banks also be checked alongside the choice of terms.