Compare the best bank interest rates^ of 2019

Compare and calculate interest rates, returns, fees and more. - Data last updated on 22 Jul 2019

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If you’re looking to open a term deposit account, it’s likely that you’re seeking the best bank interest rates on the market.

Before you make your choice, it’s important to understand interest rates and the research that can help you secure the right deposit for your needs.

How do term deposits earn interest?

Learning how term deposits earn interest really comes down to understanding the term deposit itself. When you agree to open a particular term deposit with your bank or financial institution, you’re really giving them permission to loan or invest your money during the length of your term.

So banks can lend the money to borrowers, but why does that earn you money? Well, your deposit earns interest because borrowers pay interest to the bank for their loan. This interest eventually makes its way to you monthly, annually or at maturity, depending on your payment frequency. And if you find a term deposit with the best bank interest rates, you’ll earn the maximum possible amount.

How much interest does a term deposit earn?

There’s no hard and fast rule about how much interest a term deposit can earn, especially because the financial market is always changing. The average fixed interest offer will rise and fall from year to year, and even month to month.

The key to learning how much a term deposit earns in the current financial climate is research. Read the latest term deposit news, compare term deposits online, and talk with a few different financial institutions to understand what rates are being offered.

Are there different types of interest rates?

There are two types of interest rates associated with term deposits. The first is simple interest, and it’s as easy as it sounds. Simple interest means that your original deposit makes a certain percentage of interest for the term that you’ve chosen. Monthly, annually or at maturity, you’ll receive a lump sum of the interest your deposit balance has earned.

The second type of interest is compound interest. Stated simply, compound interest means that your interest earns interest. The interest that you earn on your deposit balance is reinvested, where it can earn interest of its own. Compound interest will typically earn you more money in the long run than simple interest.

What is considered a high interest rate?

The percentage that is considered a high interest rate depends on the current financial climate. What is considered a great interest rate 10 years ago could be much different than the interest rates that you see today.

To find out the range of interest rates on offer, it’s best to run a term deposit comparison. The comparison will give you the best offers on the market, so you can see for yourself the amount that financial institutions are offering.

Is it best to apply for a term deposit through my current bank?

If you choose to apply for a term deposit through your current bank, you might enjoy certain benefits, like a simpler application process. However, one of the most important parts of your term deposit is the interest rate, so it’s best to shop around for the best term deposit on the market.

It’s possible that your bank will have the best deal available, in which case the best decision may be to open a term deposit with your bank. However, a rival institution might have a better offering.

How do I find the best bank interest rates on the market?

Finding the best bank interest rates on the market comes down to research. One of the easiest ways to find the highest fixed rate is to run a term deposit comparison that includes the interest percentage, so it’s easy to see and compare.

After you’ve found the best interest rate available, don’t forget to consider the term deposit’s other features. You might ask yourself a few questions before you know if it’s the one best suited to your needs. Does it allow for early withdrawal? How long is the term? What is the minimum deposit amount? Does it automatically roll over into a new deposit when the current term ends?

These questions will help you understand the term deposit and consider whether it fits with your preferences.

What are the main advantages of a term deposit with a high interest rate?

Securing a term deposit with high interest brings several benefits. One prominent benefit is that it’s a secure investment for your money. Unlike investment options that are high-risk and could lose you money, your term deposit will only make you money.

Another advantage is that term deposits have fixed interest rates. A fixed interest rate means that your deposit balance will earn the same amount of interest throughout your entire term. Even if interest rates go down across the market, your deposit will continue to earn interest at the agreed-upon rate. That’s why securing a term deposit with a high interest rate is so important.

Term deposits with the best bank interest rates will earn you the most interest possible in the shortest amount of time.

FAQs

Term deposits can be a great way to build your savings, but before you invest, you might have one important question. Are term deposits safe?

When it comes to investing your money, you can choose between high-risk and low-risk options. High-risk options tend to have a better potential payout, but you also risk earning no profit at all or even losing your original investment.

Low-risk options tend to earn less profit than high-risk options, but they’re also safer, with little to no risk of losing money. Term deposits fall into the low-risk category.

Term deposits are safe because they’re low-risk, but they’re also protected by the Australian government’s Financial Claims Scheme. This government guarantee will insure your deposit for up to $250,000 per person, per institution, meaning that even if the bank collapses, the government will reimburse you for your deposit.

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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, 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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