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Term Deposits

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Name: Term Deposit Rates Australia - Rates up to 5.20% | RateCity
Creator: RateCity
Published: 2017-12-04T06:02:19.000Z

Compare term deposit interest rates, and learn more about how term deposits can help grow your wealth. Find rates up to 5.20%.

80+ term deposit providers in RateCity’s database

130+ term deposit products in RateCity’s database

Sally Tindall

Mark Bristow

Updated on

02 May, 2024

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Are you on the hunt for a secure way to stash your cash, something more exciting than a typical savings account? Well, look no further than a term deposit.

For those seeking a reliable means of growing their money, a term deposit can offer the opportunity to deposit funds with their chosen bank while securing a fixed interest rate. This arrangement enables the gradual accumulation of wealth over a predetermined period. Depending on your specific financial objectives, a term deposit can serve as an effective tool to help you achieve your savings goals.

What's new in term deposits for May 2024?

Australians are reportedly sitting on some significant savings, with recently released figures from the Australian Prudential Regulation Authority (APRA), revealing that a record $8.2 billion was deposited in banks in the month of March 2024. Across term deposits, transaction accounts, mortgage offset accounts and savings accounts, Australians now have a total of $1.47 trillion deposited in the bank.

If you have some savings available, you could consider putting part of this money into a term deposit to earn simple interest at a fixed rate. This could help you enjoy relatively stable returns and less risk than many other investments.

That said, term deposits are generally less flexible than other investments, or even some savings accounts. Consider contacting a financial adviser before making changes to your saving or investing plans.

Some of the highest term deposit rates on RateCity at the time of writing include:

Term Deposit Interest Rates	Term	Banks
5.10% p.a.	5 years	Rabobank Australia Term Deposit
4.85% p.a.	4 years	Judo Bank Personal Term Deposit (At Maturity)
4.85% p.a.	3 years	G&C Mutual Bank (3 years)
4.80% p.a.	2 years	Defence Bank Term Deposit
5.10% p.a.	1 year	BankSA Term Deposit Special

Updated by Mark Bristow on 2 May 2024

What is a term deposit?

A term deposit, also known as a fixed-term deposit or time deposit, is a financial product offered by banks and other financial institutions. It is a type of savings account with a fixed interest rate and a predetermined maturity date.

Here's how a term deposit generally works:

Deposit Period: You deposit a specific amount of money into the account for a fixed period, known as the term. Terms can vary, typically ranging from a few months to several years.
Fixed Interest Rate: The interest rate is agreed upon at the time of opening the term deposit and remains fixed throughout the term. This means that you'll know exactly how much interest you'll earn over the deposit period.
Maturity Date: At the end of the term, the deposit matures. You can then choose to withdraw the principal and interest or roll it over into a new term deposit.

By opening a term deposit, you can securely deposit a sum of money in a bank and earn a predictable amount of interest over a set period, known as the term or maturity. This method of banking allows you to determine in advance the exact interest you will earn, irrespective of market fluctuations.

Once you have made the deposit, accessing the funds before the agreed-upon term ends may not be convenient. However, at the conclusion of the term, you have the option to withdraw the funds or renew the deposit for another term.

Many term deposit providers require an advance notice of about a month before you can access the deposited funds. Additionally, some banks and term deposit providers may impose financial penalties if you opt to withdraw funds from the term deposit before the full term completes. These penalties could take the form of a breakage fee or a forfeiture of a portion or all of the interest you might have earned on the deposited amount.

In general, a term deposit serves as a relatively low-risk investment option, generally suitable for those who don't need immediate access to their funds. Term deposits are often popular among individuals and businesses aiming for a safe and secure investment that comes with a fixed payout over a set period. These long term savings accounts offer guaranteed interest earnings, which makes them a good match for cautious investors who want to keep things steady and protect their cash.

What features should I look for in a term deposit?

Do term deposits charge fees?

Can I withdraw money from a term deposit?

What are the benefits of term deposits?

Term deposits offer several benefits that may be attractive to savers and investors, particularly those seeking a fixed payout over a set period.Here are some potential benefits of term deposits:

Low risk

One of the standout perks of term deposits is the relatively low risk they offer compared to some other investment options. When you lock your money into a term deposit, you agree on an interest rate upfront. This means you'll have a clear picture of your expected earnings. Even if fluctuating interest rates take a dip, you'll still pocket your agreed-upon fixed rate. In essence, term deposits provide a reassuring safety net, minimising the chances of any investment loss.

Control your spending

Once your funds are safely nestled in a term deposit account, accessing them becomes a bit of a challenge, often incurring fees. Your money essentially takes a vacation from your regular spending, tucked away for a predetermined period. This added layer of separation makes it more difficult for you to impulsively splurge on everyday expenses. Term deposits promote a disciplined approach to managing your finances, helping you stay focused on your savings goals without succumbing to the temptation of frivolous spending. It's like putting your money on lockdown to watch it grow steadily.

Low maintenance

Term deposits don’t take a lot of work to maintain. Thanks to your fixed rate, your investment should earn interest and make money with barely any effort at all. This means they often appeal to people who tend to be more hands-off with their personal finances.

Furthermore, setting up a term deposit is generally fee-free. Unless you decide to withdraw your money early, an action that’s likely to attract a penalty fee, you usually don’t need to pay anything to open or maintain a deposit account.

Secure

Unlike some other investment options, term deposits benefit from protection through the Australian Government’s Financial Claims Scheme or the government guarantee. This safeguard ensures that your term deposits with Authorised Deposit-taking Institutions (ADIs) are supported up to the value of $250,000 per account holder per ADI, providing a safety net in the rare event that the provider were to go under.

In comparison, other investment options, such as shares and ETFs are not backed by the government guarantee. Despite potentially lower returns on a term deposit, the assurance of protection for your savings up to $250,000 adds a layer of security.

Predictable returns

Term deposits offer investors predictability in terms of returns. When you open a term deposit, you agree on an interest rate upfront and know exactly how much you’ll receive in your account at the end of the term. This predictability may be advantageous for investors looking for guaranteed returns on their savings.

What are the drawbacks of term deposits?

While term deposits offer several benefits, they also have some drawbacks that should be considered before investing. Here are a few potential drawbacks of term deposits:

Limited liquidity

Term deposits are known for their fixed term, typically ranging from a few months to a few years. Once you invest your money in a term deposit, it becomes inaccessible until the maturity date. If you need immediate access to your funds, you may face penalties or fees for early withdrawal.

Lower returns compared to other investments

While term deposits are considered relatively safe investments, they usually offer lower interest rates compared to riskier investment options such as stocks or bonds. As a result, the potential for significant returns on your investment may be limited.

Lack of flexibility

Unlike some other investment vehicles, term deposits do not offer much flexibility in terms of adjusting your investment strategy during the term. Once the deposit is made, you cannot increase or decrease the amount, change the term, or negotiate the interest rate. This lack of flexibility may limit your ability to adapt to changing financial circumstances or investment opportunities.

Inflation risk

Over the duration of a term deposit, inflation can erode the purchasing power of your funds. If the interest earned on the term deposit does not keep pace with inflation, the real value of your investment may decrease over time.

Opportunity cost

By investing in a term deposit, you tie up your funds for a specific period, potentially missing out on other investment opportunities that may arise during that time. If alternative investments offer higher returns or better align with your financial goals, you may lose out on potential gains by committing your funds to a term deposit.

Interest rate risk

Term deposits typically come with fixed interest rates, meaning you are locked into that rate for the duration of the deposit. If interest rates rise during your term, you may miss out on the opportunity to earn higher returns available in the market.

It's important to carefully consider these drawbacks and assess your individual financial goals, liquidity needs, and risk tolerance before investing in term deposits or exploring alternative investment options.

Benefits

Low maintenance
Relatively low risk
Can help you manage your spending and save
Predictable returns
Deposits are likely secure, some with government guarantees

Drawbacks

Harder to access your money
Won't benefit if variable rates rise
Lower returns compared to some of the riskier investment options
Lack of flexibility

Who offers term deposits?

Most financial institutions can offer you a term deposit, including big banks, mutual banks, credit unions and online banks. If you’re already a customer, it might be especially easy to set up a term deposit with your bank, as they should already have most of your details.

However, it’s important to keep in mind that your current bank or credit union might not offer the best term deposit for your financial situation. For example, another bank may offer a more competitive interest rate or more convenient access to your money. Comparing term deposits using RateCity’s comparison tables could help you make the best choice to suit your financial goals.

Once you navigate to one of our comparison tables, enter the minimum term duration and deposit amount to find options that match your criteria. You can also use the Filters to narrow down your search results or see what else is available.

What do I need to apply for a term deposit?

Applying for a term deposit can be a lot like opening a transaction account. Once you've compared a range of term deposit options through comparison tools, such as term deposit tables and term deposit calculators, you can begin the application process.

After you’ve made your choices regarding your term deposit, you’ll need to fill out a form to apply. You'll typically need the following:

Proof of age (18 and over)
To be an Australian resident or 457 visa holder
Personal identification, such as a passport or drivers license.
Employment and income information

How to find and apply for a term deposit

Find a term deposit with the best interest rate: Before committing to a term deposit of any kind, consider finding one with an interest rate that gives you the most to work with. The higher the interest rate, the more likely that your money will be able to make money in the background. You could use our Term Deposit Calculator to calculate your potential earnings based on different interest rates and various investment terms.
Pick a term to leave your money: It's also important to pick a term that you're comfortable leaving your money with the bank or lender for. A term deposit is named because you're leaving your deposit for a term, and that term is one of the main factors to determine just how much money you can make. Term deposits can be as little as one month and as long as five years (60 months), though the longer you leave your money in, the more interest you could end up seeing. Pick your term carefully, because you can't just withdraw your money from a term deposit without incurring a penalty.
Apply for your term deposit: When you're ready to apply, head to your bank in person or use an online form to sign up and deposit your money. Please note: Some financial institutions will allow you to enter your information online, while others will require that you visit a branch. Check with the bank or lender you're using to find out which you need to do.
Wait: Once you've deposited money into your term deposit, you're more or less just going to have to wait until the term has ended. Term deposits accrue interest as the deposit matures, but you can't take the money with its interest out until after the term has ended without incurring costs. Most banks and lenders will apply break fees if you take money out of a term deposit early, with a 31 day notice period also often required to do so. You may also see a reduced interest penalty if you decide to take money out before a term deposit has finished.

Sally Tindall

Research Director

Sally Tindall is the Research Director for RateCity and a regular commentator on television and radio about personal finance matters. Since she joined RateCity in 2015, she has covered mortgages, credit, loans, superannuation, and more, and is passionate about helping everyday Australians get access to affordable finance options, making budgeting and everyday expenses easier for all. Sally is a regular contributor to news outlets including Fairfax's Sydney Morning Herald and The Age, and News Ltd's Daily Telegraph, the Herald Sun and news.com.au. On TV, you can find Sally's expertise on programs from Seven, Nine, Ten, ABC, and SBS, and you can listen to Sally regularly on ABC Radio, 2GB, 3AW, 4BC, and a host of others.

Mark Bristow

Personal Finance Editor

Mark Bristow is RateCity's Home & Personal Finances Editor, and an experienced analyst, researcher, and producer. Focused primarily on Australian mortgage and home loan expertise, he has been a journalist and writer in the financial space for over ten years, previously researching and writing commercial real estate at CoreLogic. In the years since, Mark has worked for the Winning Group, Expedia, and has seen articles published at Lifehacker and Business Insider.

This article was reviewed by Personal Finance Editor Peter Terlato before it was published as part of RateCity's Fact Check process.

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^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, target market determination fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.

What's new in term deposits for May 2024?

Some of the highest term deposit rates on RateCity at the time of writing include:

Term Deposit Interest Rates	Term	Banks
5.10% p.a.	5 years	Rabobank Australia Term Deposit
4.85% p.a.	4 years	Judo Bank Personal Term Deposit (At Maturity)
4.85% p.a.	3 years	G&C Mutual Bank (3 years)
4.80% p.a.	2 years	Defence Bank Term Deposit
5.10% p.a.	1 year	BankSA Term Deposit Special

Updated by Mark Bristow on 2 May 2024

What is a term deposit?

Here's how a term deposit generally works:

Deposit Period: You deposit a specific amount of money into the account for a fixed period, known as the term. Terms can vary, typically ranging from a few months to several years.
Fixed Interest Rate: The interest rate is agreed upon at the time of opening the term deposit and remains fixed throughout the term. This means that you'll know exactly how much interest you'll earn over the deposit period.
Maturity Date: At the end of the term, the deposit matures. You can then choose to withdraw the principal and interest or roll it over into a new term deposit.

What are the benefits of term deposits?

Term deposits offer several benefits that may be attractive to savers and investors, particularly those seeking a fixed payout over a set period.Here are some potential benefits of term deposits:

Low risk

Control your spending

Low maintenance

Secure

Predictable returns

Who offers term deposits?

What do I need to apply for a term deposit?

After you’ve made your choices regarding your term deposit, you’ll need to fill out a form to apply. You'll typically need the following:

Proof of age (18 and over)
To be an Australian resident or 457 visa holder
Personal identification, such as a passport or drivers license.
Employment and income information

Find and compare high interest term deposits

Consider these promoted savings accounts

Compare term deposit options

On this page

What's new in term deposits for May 2024?

Term Deposit Interest Rates

Term

Banks

What is a term deposit?