Compare the best fixed term deposit interest rates^ in Australia

Compare and calculate interest rates, returns, fees and more. - Data last updated on 20 Aug 2019


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If you’re about to enter into an investment, you might be considering a term deposit. Term deposits are generally low-risk, and can be a good option for first-time investors.

However, on top of choosing between short-and long-term deposits, you also need to ensure you’re getting a good fixed rate – ideally, the best fixed interest rates in Australia.

Here’s a guide to help you make an informed decision.

What is a fixed-rate term deposit?

A term deposit is a type of investment where you give a lender an amount of cash to hold over a fixed term. The lender will give you a fixed interest rate for the duration of the term. Upon completion of the term, you’ll receive your deposit back, as well as the interest earned.

For example, imagine you give a lender a term deposit of $10,000 for a term of three years, with a fixed interest rate of 3 per cent. At the end of the three-year term, you’ll get your $10,000 back, plus the amount earned in interest.

How does a fixed interest rate work?

A fixed rate is, as the name implies, a rate that stays the same over the period of the investment. You agree on the fixed rate with the lender before entering into the term deposit.

Generally, the longer the term deposit entered in to, the higher the interest rate. You could think of this as a greater reward for letting the lender mind your money for longer. So, generally, the best fixed interest rates in Australia are for longer term deposits.

What’s the difference between a short and long term deposit?

A long term deposit usually applies to a term deposit that is longer than 12 months. Generally, the longer the term deposit, the better interest rate you’ll receive from the lender. Think of it as a bigger reward for letting them mind your money for a longer period of time.

Long term deposits are a great ‘set and forget’ investment option, as you can pass on your sum of money and forget about it while you build up interest. However, if for some reason you require the money before the term deposit is up, you can be penalised.

A short term deposit generally refers to a deposit that’s locked in for less than 12 months (usually the minimum is one month). The main reason you’d choose a short term deposit is the benefit of being able to reach your money sooner – especially if an unforeseen emergency occurred or your financial circumstances changed unexpectedly. It also gives you to opportunity to shop around for a better rate once the term is up, instead of being stuck with one rate for several years.

How is term deposit interest calculated?

To calculate how much interest you’ll earn on a term deposit, simply divide the fixed interest rate by 365. This will give you the daily interest rate.

Multiply the daily interest rate by the total days in your term deposit. (The amount earned on principal and interest is rounded to the nearest cent.)

What is a term deposit calculator?

Many comparison websites or financial institutions offer term deposit calculators, which help you determine how much you’ll earn on your investment.

The calculator takes into consideration the amount invested, the term of investment and the fixed interest rate offered. A calculator can be a good way to compare different term deposits to determine which offers the best return on investment.

Why should I choose a fixed-rate term deposit?

Term deposits can be a good investment option because:

  • They’re more predictable and less volatile than other investments
  • They’re a good option for people who struggle to save, as your money is essentially locked away for a period of time (like forced saving)
  • You can choose a term that you’re comfortable with and is in line with your short or long term goals – generally you can choose between 30 days up to five years
  • They can be an excellent way to bump up your saving for a first home, new car, holiday or renovations
  • The fixed interest rate is calculated daily, so you have the ability to continually earn more – especially if you have a deposit with the best fixed interest rates in Australia
  • Fixed-rate term deposits don’t require any monthly deposits, establishment fees or management, so they’re extremely low-maintenance.

Are there any tips and traps to be aware of?

Before entering into a fixed rate term deposit, you should always consider:

  • Tenure: This simply means the length of your investment. You generally have a choice between 30 days or five years, so always make sure you enter into a term that you’re comfortable with.
  • Money requirements: A term deposit ‘locks’ your money away for a fixed time. Therefore, consider whether you can comfortably manage any unforeseen financial changes without this money. Needing to withdraw the funds before the end of the term deposit will likely result in a penalty fee.

Who offers the best fixed interest rates in Australia?

A vast number of banks and financial institutions offer fixed-rate term deposits. From year to year, different banks will offer attractive deals, so it’s essential to always do your research.

Speak to a financial adviser or representative from the bank to better understand your options.

^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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