Compare Term Deposits

Compare and calculate interest rates, returns, fees and more. - Last updated on 18 Oct 2019


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It’s great to have a bank account that safely stores your money, but sometimes we want more in return.

Term deposits offer the opportunity to house an investment at your chosen bank and lock in a steady interest rate.

What is a term deposit?

Term deposits are much like savings accounts, but with a few key differences. After you’ve deposited your money into your chosen lender, you won’t be able to reclaim those funds until the end of an agreed-upon timeframe, or ‘term’.

In return, you’re able to lock in a fixed interest rate for the duration of the term. A fixed rate means you’ll know exactly how much interest your money will accumulate regardless of changes in the market.

How do term deposits work?

Essentially, term deposits are investments. This means that you make an agreement with your financial institution to deposit a set amount of money for a set amount of time. During this time, your money is invested, and you earn a fixed interest rate.

At the end of your term, you’re able to reclaim your original deposit as well as the interest that your money has earned.

Which institutions offer term deposits?

Most lenders can offer you a term deposit. Big banks, mutual banks, credit unions and online banks usually have a term deposit offering, and it might be especially easy to set up if you already hold an account with the institution.

It’s important to keep in mind that your current bank or credit union might not have the best rate on the market, so comparing term deposits can help you make the best choice for your financial goals.

What features should I look for in a term deposit?

There are several features you should look for when choosing a term deposit. The first is the fixed interest rate. The interest rate you lock in when you deposit your funds is the rate that you’ll earn throughout the term, so you want to be sure you are getting the best rate possible.

You’ll also want to consider the term. The term is the length of time that your funds will be locked away. Term deposits are usually broken up into two categories: short-term and long-term deposits. Short-term deposits can be as short as one month, while long-term deposits can last years. Usually, you’ll find that longer terms offer a higher interest rate, but it’s best to check with your financial institution.

The rollover terms are another feature that you should consider before committing to a term deposit. Rollover terms refer to the options available to you at the end of your term; that is, when you’re able to reclaim your investment. Some term deposits will allow you to immediately reinvest your savings. Reinvesting can mean that your savings earn you even more interest. If you do decide to reinvest right away, it’s important that you reconsider the interest rate to make sure it’s still the best rate available.

Are there any fees associated with term deposits?

The fees associated with a term deposit depend on the institution offering the account. You won’t typically find annual or monthly fees attached to your term deposit. In fact, many term deposits don’t charge any fees.

However, you should be aware of penalty fees. A penalty fee usually applies if you decide to access your money before the end of your term. These fees will vary by lender, so it’s best to check on the penalty fee amount before agreeing to a term deposit.

What are the pros of term deposits?

One of the biggest pros to having term deposits is that they’re low-risk. Term deposits force you to sign up to a rate before your money is locked away, which means you know exactly what you’ll be earning, and there’s no risk of losing any of your investment. Even if the market rates fall, you’ll still earn your fixed rate.

Term deposits also help you manage your spending. After you deposit your money into your chosen account, you’re not able to access it. This security is great for people who are saving for something expensive, like a house or car. Because your money is unavailable to you for a fixed amount of time, there’s no risk that you’ll spend the money on something frivolous.

The third benefit to term deposits is that they don’t take much effort to maintain. After your money is locked into a term deposit, it doesn’t require any maintenance to make money. Because of your fixed rate, your investment will make money without any effort at all. The fact that term deposits don’t require maintenance means they’re perfect for people who tend to be more hands-off with their personal finances.

What are the cons of term deposits?

Term deposits have a range of benefits, but they also have a few drawbacks. One of these drawbacks is that you can’t access your money during the term without being charged a penalty. While for some this can be a positive, for others it can make term deposits seem restrictive. If you’re looking for a lot of flexibility and control, you might consider a savings account rather than a term deposit.

Another downside is that your interest rate won’t rise with the market. If the market interest rates rise, your term deposit won’t adopt a higher rate because the same rate has been locked in for the entire length of your term.

When should I consider opening a term deposit account?

There are a few different signs that you should consider a term deposit. One of these signs is that you’re looking for a low-risk way to invest your money. Term deposits offer a steady interest rate that will make you money without having to take big risks.

Another sign is that you’re trying to save for a large purchase, like a home, but can’t seem to stop spending your savings on non-essentials. A term deposit may help by locking away your money so that you can’t use it on frivolous purchases. You can also choose the term that fits your goals, so you might lock your money away for a year or more to spend on a big purchase, or even keep as an emergency fund.

How do I apply for a term deposit?

The process of applying for a term deposit is a lot like applying for a bank account. However, when opening a term deposit, there are few decisions you’ll need to make. The first decision is the amount of money you’d like to invest. The second is the interest rate that you’ll receive for the length of your term, and the third is the length of the term itself.

After you’ve made your choices regarding your term deposit, you’ll need to fill out a form to apply. Some financial institutions will allow you to enter your information online, while others will require that you visit a branch.

Sally is the Research Director for RateCity. Passionate about helping everyday Australians save money through smart budgeting and get access to affordable finance options without falling victim to marketing ploys, she's contributes to news outlets from Fairfax and News, and a regular commentator on television and radio about personal finance matters.

^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, fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.

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